2014 best practices study update · 2014 best practices study update new day, new possibilities ......

2014BESTPRACTICESSTUDY UPDATENew Day, New Possibilities

Conducted by :

&

Conducted by :

& Independent Insurance Agents & Brokers of America, Inc.

®

2014 BestPractices Study

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2014 Best Practices Study

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Copyright©2014 by the Independent Insurance Agents & Brokers of America and Reagan Consulting, Inc. All rights reserved.

Special AcknowledgementWe wish to thank the following companies for their sponsorship which has funded the development of the 2014 Best Practices Study and the Best Practices Gateway website.

For state association and Council for Best Practices use only.


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TABLE OF CONTENTSIntroduction

Analysis of Agencies with Revenues Under $1,250,000

Key Benchmarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Profitability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Employee Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Producer Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Service Staff Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Analysis of Agencies with Revenues Between $1,250,000 and $2,500,000

Key Benchmarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Profitability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Employee Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Producer Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Service Staff Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51


Key Benchmarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Profitability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Employee Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69Producer Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Service Staff Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77


Key Benchmarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Profitability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Employee Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95Producer Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96Service Staff Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103



iii



Key Benchmarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Profitability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118Employee Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121Producer Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122Service Staff Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129

Analysis of Agencies with Revenues Over $25,000,000

Key Benchmarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142Profitability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144Employee Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .147Producer Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148 Service Staff Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 Insurance Carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155

Appendix

Population Density Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159Regional Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161Glossary / Definitions / Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163For state association and Council fo

r Best Practices use only.


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INTRODUCTIONSince 1993 the annual Best Practices Study has served as a tool to help agency owners and managers understand how their business operations perform and measure up to the top performing firms across the country. It is a “must have” for those agencies that want to become the best they can be.

The 2014 Best Practices Study provides critical performance benchmarks in six agency revenue categories ranging from Under $1,250,000 to Over $25,000,000. Agencies can measure, evaluate, and compare results for agency operations including:

• Income & Expense Distribution

• Revenue & Profitability Growth

• Sales & Service Staff Compensation/Productivity

• Technology Expenses

• Property & Casualty and Life & Health Carrier Representation

• And much more

The 2014 study can be purchased from the Independent Insurance Agents & Brokers of America (Big “I”) Education Department. Orders can be placed at http://bp.reaganconsulting.com or at www.independentagent.com. For more information please call 1-800-221-7917.

About The Study

The History

The annual Best Practices Study originated in 1993 as an initiative by the Independent Insurance Agents & Brokers of America (Big “I”) to help its members build and maintain the value of their most important assets, their agencies. By studying the leading agencies and brokers in the country, the association hoped to provide member agents with meaningful performance benchmarks and business strategies that could be adopted or adapted for use in improving agency

performance, thus enhancing agency value.

The Big “I” retained the principals of Reagan Consulting to create and perform the first Best Practices Study. Annual updates conducted by Reagan Consulting continue to provide important financial and operational benchmarks, and the study is recognized as one of the most thoughtful, effective and valuable resources ever made available to the industry.

The Process

Once every three years the Big “I” asks insurance companies, state association affiliates, and other industry organizations to nominate for each of the study revenue categories those agencies they consider to be among the better, more professional agencies in the industry.

The nominated agencies are then invited to participate. They must be willing to share key business practices/philosophies and to complete an in-depth survey detailing their financial and operational year-end results. Those results are then scored and ranked objectively for inclusion on the basis of operational excellence.

In 2013, the beginning of the current three-year study cycle, nearly 1,200 independent agencies throughout the U.S. were nominated to take part in the annual study. Although participation required extensive time and effort, 308 submitted their data; only 217 qualified for the honor and acquired the Best Practices status.

To be chosen, the agency had to be among the top 30-40 top performing agencies in one of six revenue categories. Their year-end results and business practices were then compiled to create the Best Practices benchmarks. The agencies retain their Best Practices status for the three-year study cycle as long as they submit their data each year so that the benchmarks can be updated annually. The 2014 study continues to examine the 2013 agencies.

Taking part in the study has become a prestigious recognition of the superior accomplishments of the top insurance agencies in the country. 2016 will mark



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the beginning of a new study cycle in which the nomination and qualification process will be repeated. Those agencies that believe they have the qualities of a Best Practices Agency and wish to be nominated in 2016 for the next study cycle should contact their state association or insurance carrier and ask that their name be submitted.

About the Best Practices

Gateway WebsiteThe electronic version of this study can be accessed via the websites of the Big “I” (www.independentagent.com) and Reagan Consulting (www.reaganconsulting.com).

From the Best Practices Gateway home page, users can do the following:

• View an HTML version of the current and past Best Practices Study Executive Updates

• Download a Best Practices comparison spreadsheet to compare their year-end results with the study’s results

• Access other Best Practices studies, tools and products

• Order a copy of the study

Other Best Practices Studies and Tools

In addition to the annual Best Practices Study, many other useful studies, resources, and tools are available to help agencies improve their performance and enhance the value of their businesses. Two of the most frequently used tools are The Agency Self-

Diagnostic Tool and the Joint Agency Company

Planner. These Best Practices tools are part of a complete line of Best Practices products and services. Order forms can be downloaded from http://bp.reaganconsulting.com or can be purchased online at www.independentagent.com.

If You Have Questions

If you have questions about the information published in the 2014 Best Practices Study please contact the Big “I” Education Department at 800-221-7917 or Reagan Consulting at 404-233-5545.



1




2


Agencies with Revenues Under $1,250,000

$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000



AgencieswithRevenuesUnder $1,250,000

3


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Key Benchmarks at a Glance Average +25% Profit +25% Growth

Growth

Organic Growth By Line of Business*

Commercial P&C 1.8% -12.7% 9.2%

Personal P&C 4.1% 2.7% 9.0%

Group Medical -6.2% -28.4% -9.8%

All Other Group -9.3% * *

Total Organic Growth 4.6% 1.4% 14.1%

Profit

Pro Forma Pretax Profit 26.1% 48.3% 27.1%

Pro Forma EBITDA 29.0% 48.6% 30.1%

Rule of 20 Score 18.2 24.1 23.5

Financial

Average Top 25%

Current Ratio 1.53:1 2.82:1

Receivable/Payable Ratio 62.4% 12.3%

Accounts Receivables > 60 Days 48.5% *

Accounts Receivables > 90 Days 4.2% 0.0%

Productivity

Average +25% Profit +25% Growth

Revenue per Employee $135,346 $214,865 $135,198

Compensation per Employee $66,272 $78,802 $63,149

Spread per Employee $69,074 $136,063 $72,049

Annual New Commission Generated per Validated Producer

Average Top 25%

Commercial P&C $33,020 $64,733

Personal P&C $25,231 $43,224

Life & Health/Financial * *

Service Staff Total Payroll as % of Line of Business Revenue

Average # of Service Staff

Commercial P&C 25.5% 1.8

Personal P&C 25.8% 2.0

Group Life & Health/Financial 29.7 0.5

*Insufficient Data

*Excludes any acquired revenue



Agencieswith

RevenuesUnder

$1,250,000

4


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Total Revenues: $810,333

Population Density of Metropolitan Areas Where Home Offi ce is Located

Average +25% Profi t +25% Growth

Less than 50,000 62.1% 42.9% 57.1%

50,000 – 250,000 10.3% 14.3% 14.3%

250,000 – 1,000,000 17.2% 28.6% 14.3%

More than 1,000,000 10.3% 14.3% 14.3%

Corporate Structure

C 17.2% 0.0% 14.3%

S 69.0% 71.4% 71.4%

Partnership 0.0% 0.0% 0.0%

LLC 10.3% 28.6% 14.3%

Sole Proprietorship 3.4% 0.0% 0.0%

Average Number of Agency Locations

(Main Offi ces and Branch Offi ces) 1.3 1.0 1.6

Total Square Footage of Office Space 2,818 2,251 1,793

# of States in which Offices are Located 1.0 1.0 1.0

Agency has an ESOP 0.0% 0.0% 0.0%

% of Stock Owned by ESOP 0.0% 0.0% 0.0%

Shareholders

Number of Shareholders (excluding ESOP) 2.2 1.7 1.0

High 13.0

Low 1.0

Ownership Percentage

% Owned by Largest Shareholder 75.5% 70.0% 91.7%

High 100.0%

Low 33.3%

Shareholder Age

Current Age of Largest Shareholder 53.0 51.2 46.0

Parent Corporation

Average

Other included Independent Agency.

% of Agencies Owned by Another Corporation 3.7%

Description of Parent Corporation

Financial Institution 50.0%

National Broker 0.0%

Other 50.0%

Member of Group

% of Agencies Belonging to a Franchise, Cluster, Alliance/Network or Aggregator Group 41.2%

Other included Continental Insurance Agency Alliance, SIAA, Consolidated Agencies, ISU, Empire Spectrum Group, Combined Agents of America, Marketsource,

TIA, Bainswest, and DCS Risk Management Group.

Profi le (of Agencies in this Study Group)




5


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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Revenues

Revenue by Source (% of Gross Revenues)

(% by Source) Average +25% Profit +25% Growth

Property & Casualty

Commercial Commissions & Fees 41.2% 27.0% 29.6%

Bonds 0.4% 0.1% 0.2%

Personal Commissions 45.2% 60.9% 57.6%

Value Added Services 0.4% 0.0% 1.0%

Contingent/Bonus 6.2% 6.8% 8.1%

Total P&C 93.5% 94.8% 96.5%

Life & Health/Financial

Group Medical Commissions & Fees 3.0% 1.0% 1.4%

All Other Group Commissions & Fees 0.4% 0.1% 0.0%

Individual L&H Commissions & Fees 2.6% 4.1% 1.6%

Bonus/Overrides 0.0% 0.0% 0.2%

Total L&H/Financial 6.1% 5.1% 3.3%

Investments 0.1% 0.0% 0.0%

Miscellaneous 0.3% 0.0% 0.2%

Gross Revenues 100.0% 100.0% 100.0%

Brokerage Commission Expense 0.3% 0.2% 0.0%

Net Revenues 99.7% 99.8% 100.0%

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees

P&CPersonalComm& Fees

P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees

L&HAll OtherGroupComm& Fees

L&HIndividualComm& Fees

L&HBonus/

Overrides

Investments Miscellaneous




Agencieswith

RevenuesUnder

$1,250,000

6


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


5%

10%

15%

20%

25%

21.4%

0%

What the Typical Transactions Looked Like

Revenues Acquired per Transaction Multiples of Revenue Paid

Average * Average *

High * High *

Low * Low *

Acquired Revenues

% of Agencies

Acquiring

Average

Commissions

Acquired

% of

Net Revenues

Acquisitions Made in Last 12 Months 6.9% $65,806 15.8%

Revenue by Acquisition

*Insufficient Data

Revenue by Specialty/NicheAverage +25% Profit +25% Growth

% of Agencies having an Industry and/or

Product Specialty/Niche37.9% * *

Total Commissions & Fees Generated from All Specialties/Niches $160,853 * *

Total Specialty/Niche Revenue as % of Net Revenues 21.4% * *

*Insufficient Data

Specialty/Niche Revenue as % of Net RevenueFor state association and Council fo




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Producer Info

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Insurance Carriers

Appendix

Revenue by Account ConcentrationAverage +25% Profit +25% Growth

% of Revenue Derived from

Largest Account 4.9% 1.5% 2.6%

High 18.2%

Low 0.5%

10 Largest Accounts 13.2% 9.4% 7.9%

High 32.3%

Low 1.7%


“Other” Group Life & Health* Revenue (% from source)

Life 63.8% 56.3% *

Disability 8.0% 15.7% *

Dental & Vision 16.1% 23.3% *

Retirement/Pension 0.6% 1.7% *

Worksite/Voluntary/Supplement 0.0% 0.0% *

Long-Term Care 0.0% 0.0% *

Employee Benefits TPA 11.6% 3.0% *

All Other 0.0% 0.0% *

*Insufficient Data

*Excludes Group Medical



Agencieswith

RevenuesUnder

$1,250,000

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Revenue by Account Size(as measured by Comm. & Fees – not premium) Average +25% Profit +25% Growth

Commercial P&C

Greater than $25,000

% of Book 17.9% 0.0% 6.6%

# of Accounts 2.5 * *

Total Revenue $161,874 * *

Revenue per Account $65,949 * *

Between $10,000 and $25,000

% of Book 13.1% 17.7% 5.7%

# of Accounts 4.4 4.7 *

Total Revenue $72,556 $84,027 *

Revenue per Account $16,325 $18,006 *

Between $5,000 and $10,000

% of Book 12.2% 21.9% 7.8%

# of Accounts 9.0 17.0 5.0

Total Revenue $54,897 $103,948 $27,759

Revenue per Account $6,069 $6,115 $5,552

Less than $5,000

% of Book 56.8% 60.4% 80.0%

# of Accounts 518.2 346.5 377.8

Total Revenue $225,683 $215,090 $190,070

Revenue per Account $435 $621 $503

(as measured by number of lives) Average +25% Profit +25% Growth

Group L&H/Financial

Over 100 Lives

% of Book 20.4% 0.0% 0.0%

# of Accounts 1.3 * *

Total Revenue $34,186 * *

Revenue per Account $27,349 * *

50 - 100 Lives

% of Book 1.6% 0.0% 0.0%

# of Accounts * * *

Total Revenue * * *

Revenue per Account * * *

25 - 50 Lives

% of Book 23.9% 21.5% 19.4%

# of Accounts 2.9 1.3 *

Total Revenue $22,878 $9,544 *

Revenue per Account $8,007 $7,158 *

Under 25 Lives

% of Book 54.1% 78.5% 80.6%

# of Accounts 32.7 42.3 28.3

Total Revenue $24,151 $34,764 $15,807


*Insufficient Data




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Producer Info

Service Staff Info

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Insurance Carriers

Appendix

Revenue Growth by Source

*Insufficient Data


Commercial P&C

Renewals1 85.2% 59.9% 94.7%

New Business2 16.5% 27.5% 14.6%

Acquired Revenues3 0.4% 0.0% 0.0%

Organic Growth4 1.8% -12.7% 9.2%

Total Growth5 2.2% -12.7% 9.2%

Bonds P&C

Renewals1 71.4% * 49.9%

New Business2 26.8% * 56.7%

Acquired Revenues3 0.0% * 0.0%

Organic Growth4 -1.7% * 6.7%

Total Growth5 -1.7% * 6.7%

Personal P&C

Renewals1 85.8% 75.3% 91.7%

New Business2 18.3% 27.4% 17.3%


Organic Growth4 4.1% 2.7% 9.0%

Total Growth5 4.4% 2.7% 9.0%

Value Added Services P&C

Renewals1 69.7% * *

New Business2 21.5% * *

Acquired Revenues3 0.0% * *

Organic Growth4 -8.8% * *

Total Growth5 -8.8% * *

1Renewal Revenues as a % of prior year’s total revenues for this line of business. This figure is impacted by attrition (loss or retention of accounts) and by changes in premium and commission levels. The higher the %, the more favorable the results.

2New Revenues as a % of prior year’s total revenues for this line of business. The higher the %, the more favorable the results.

3Acquired Revenues as a % of prior year’s total revenues for this line of business. The % indicates the significance of acquired business.

4Growth in Revenues from prior year excluding acquired revenues.

5Growth in Revenues from prior year including acquired revenues.

*Insufficient Data



Agencieswith

RevenuesUnder

$1,250,000

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Employee Overview

Producer Info

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Insurance Carriers

Appendix

Revenue Growth by Source (continued)

*Insufficient Data


Group Medical L&H

Renewals1 86.6% 70.5% 76.3%

New Business2 7.1% 1.2% 13.9%


Organic Growth4 -6.2% -28.4% -9.8%

Total Growth5 -6.2% -28.4% -9.8%

All Other Group L&H

Renewals1 84.7% * *





Individual L&H

Renewals1 44.1% 29.0% 55.2%

New Business2 49.6% 85.4% 24.5%


Organic Growth4 -6.3% 14.4% -20.3%

Total Growth5 -6.3% 14.4% -20.3%

Total Commissions & Fees (P&C, L&H)

Renewals1 86.0% 73.3% 92.1%

New Business2 17.6% 26.5% 16.4%


Organic Growth4 3.7% -0.2% 8.5%

Total Growth5 6.0% -0.2% 8.5%

Brokerage Commission Expense Growth * * *

Net Commissions & Fees Growth (Organic)6 3.7% -0.2% 8.5%

Net Commissions & Fees Growth (Total)7 6.0% -0.2% 8.5%

Other Income

P&C Contingent Income Growth 1.5% 1.8% *

L&H Bonus Income Growth * * *

Investment Income Growth -7.5% * *

Gross Revenue Growth 6.9% 1.4% 14.1%

Net Revenue Growth (Organic)8 4.6% 1.4% 14.1%

Net Revenue Growth (Total)9 6.9% 1.4% 14.1%






6Growth in Total Commissions & Fees (less Brokerage Commission Expense) from prior year excluding acquired revenues.

7Growth in Total Commissions & Fees (less Brokerage Commission Expense) from prior year including acquired revenues.

8Growth in Net Revenues (Gross Revenue less Brokerage Commission Expense) from prior year excluding acquired revenues.

9Growth in Net Revenues (Gross Revenue less Brokerage Commission Expense) from prior year including acquired revenues.




11


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Revenues

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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Historical Organic Growth (in Net Revenue)

Future GrowthPercentage of agencies considering line of business as very important to growing agency’s revenue over the next 3 years

Surety-Bonding 10.3%

Personal P&C 79.3%

89.7%Small Commercial P&C

Individual Life & Health 24.1%1

Group Medical/Health Insurance 24.1%1

All Other Group Benefits

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007 2008 2009 2010 2011 2012 2013 2014

10%

–10%

20%

30%

40%

9.2%

12.0%

24.6%

5.7%7.9%7 9%

21.2%

–0.5%

2.2%

12.3%

2.0%

–1.5%

16.8%

–2.0%

0.4%

10.0%

1.9%5.4%

11.6%

6.9% 7.4%7 4%

19.2%

4.6%1.4%

14.1%

0%




Agencieswith

RevenuesUnder

$1,250,000

12


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenues)


Compensation Expenses

Payroll: Employee 39.7% 31.9% 40.5%

Payroll: “Non-Employee” - 1099 Producers/Temp Help 4.3% 0.8% 3.8%

Total Payroll 44.0% 32.7% 44.3%

Benefits: Payroll Taxes 3.9% 2.7% 3.0%

Benefits: Retirement 1.4% 1.3% 1.5%

Benefits: Insurance 3.0% 0.7% 3.2%

Benefits: Other 0.3% 0.9% 0.2%

Total Benefits 8.6% 5.6% 7.9%

Total Compensation 52.5% 38.3% 52.2%

Selling Expenses

T&E/Conventions 1.2% 0.6% 1.0%

Auto Expenditures 1.5% 0.9% 1.5%

Auto Depreciation 0.4% 0.0% 0.5%

Total Auto 2.0% 0.9% 2.0%

Advertising/Promotions 2.0% 2.1% 2.5%

Total Selling 5.1% 3.5% 5.5%

Operating Expenses

Occupancy Expenditures 4.7% 4.1% 4.1%

Occupancy Depreciation/Amortization 0.4% 0.1% 0.1%

Total Occupancy 5.0% 4.2% 4.3%

Office Equipment Expenditures 0.3% 0.2% 0.0%

Office Equipment Depreciation 0.1% 0.0% 0.1%

Total Office Equipment 0.4% 0.2% 0.1%

IT (Information Technology) 2.6% 1.8% 2.2%

IT Depreciation/Amortization 0.1% 0.0% 0.1%

Total IT 2.7% 1.8% 2.4%

Telephone 1.3% 1.0% 1.2%

Postage 0.5% 0.3% 0.5%

Supplies/Printing 1.4% 1.2% 1.6%

Dues/Subscriptions/Contributions 1.2% 0.9% 0.9%

Taxes/Licenses 0.8% 0.5% 1.7%

Insurance 2.1% 1.4% 1.7%

Professional Fees 0.6% 0.5% 0.8%

Bad Debts 0.0% 0.0% 0.1%

Outside Services 0.6% 0.0% 0.9%

Education/Training 0.3% 0.2% 0.2%


Total Operating 17.3% 12.4% 16.5%

continued on next page




13


Key Benchmarks

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Compensation Selling Operating Administrative0%

10%

20%

30%

40%

50%

60%Average +25% Profit +25% Growth

5.1% 3.5%3.5%5.5%

17.3%17 3%12.4%12 4%

16.5%16 5%

2.3%2.3%0.3%0 3%

2.3%2.3%

52.2%52 2% 52.2%52 2%

38.3%38.3%


Administrative Expenses

Amortization of Intangibles 0.9% 0.2% 1.0%

Officer Life 0.2% 0.1% 0.3%

Interest 1.0% 0.0% 0.9%

Other 0.2% 0.0% 0.0%

Total Administrative 2.3% 0.3% 2.3%

Total Expenses 77.3% 54.5% 76.5%

Pre-Tax Profit (Loss) 22.7% 45.5% 23.5%

EBITDA 25.6% 45.8% 26.4%


Expense Growth Over Prior Year

Compensation Expense 5.6% -6.1% 7.7%

Selling Expense -4.8% -7.4% -14.2%

Operating Expense 7.1% 5.9% 10.7%

Administrative Expense 4.0% * *

Expenses (as % of Net Revenues) — continued


*Insufficient Data



Agencieswith

RevenuesUnder

$1,250,000

14


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Revenues (as % of Gross Revenue)

Commercial Lines 41.2% 27.0% 29.6%

Bonds 0.4% 0.1% 0.2%

Personal Lines 45.2% 60.9% 57.6%

VAS - P&C 0.4% 0.0% 1.0%


Group Medical 3.0% 1.0% 1.4%

All Other Group 0.4% 0.1% 0.0%

Individual Life & Health 2.6% 4.1% 1.6%




Total Revenues 100.0% 100.0% 100.0%


Net Revenues 99.7% 99.8% 100.0%


Compensation 52.5% 38.3% 52.2%

Selling 5.1% 3.5% 5.5%

Operating 17.3% 12.4% 16.5%

Administrative 2.3% 0.3% 2.3%



Pre-Tax Profit 22.7% 45.5% 23.5%

Pro Forma Pre-Tax Profit1 26.1% 48.3% 27.1%

Operating Pre-Tax Profit2 17.3% 41.6% 16.3%

EBITDA3 25.6% 45.8% 26.4%

Pro Forma EBITDA4 29.0% 48.6% 30.1%

1Pre-tax Profits if discretionary expenses are eliminated and all owners compensated as employees

2Pre-tax Profits excluding contingents, bonus and investment income

3EBITDA—Earnings Before Interest Taxes Depreciation and Amortization

4EBITDA if discretionary expenses are eliminated and all owners compensated as employees

Profit/Loss Summary

Profit/Loss (as % of Net Revenues)




15


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix 5%

10%

15%

20%

25%

30%

35%

0%2008

EBITDA Margin Operating Margin

26.2%

33.0%33 0%

26.0%24.8%

16.5%

21.4%

6.6%6 6%

18.5%

5.0%

23.9%23.9%

9.9%

22.8%22 8%

10.8% 11.0%

25.8% 25.6%

29.0%

17.4%17 4% 17.3%17 3%

20102007 2009 2011 2012 2013 2014

%

Pro Forma EBITDA

22.8%22 8%

27.5%27 5% 28.5%28 5%26.2%

30.3%

Profitability

About EBITDA Margin and Operating Margin

EBITDA Margin is calculated by dividing a firm’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) by the firm’s net revenues.

Pro Forma EBITDA Margin is calculated by dividing a firm’s Pro Forma EBITDA by the firm’s Pro Forma net revenue.

Operating Margin is calculated as EBITDA less contingent income divided by Pro Forma net revenues less contingent income.

Historical EBITDA Margin & Operating Margin (for Average Group)



Agencieswith

RevenuesUnder

$1,250,000

16


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Balance Sheet


Tangible Net Worth (% of Net Revenue) 2.3% 14.7%

Receivables/Payable Ratio 62.4% 12.3%

Aged Receivables

% Receivables Aged Past 60 Days 48.5% *

% Receivables Aged Past 90 Days 4.2% 0.0%


Agency Billed vs. Direct Billed by Carrier

% of P&C Revenues that are Agency Billed 15.5% 3.6% 4.9%

% of P&C Revenues that are Direct Billed 81.0% 82.1% 95.1%

Financial Stability

Accounts Receivable

The Rule of 20 is a simple growth and profitability balancing equation that provides a quick way to determine whether or not an agency is creating value for its shareholders. It states that an agency will drive industry-standard shareholder returns if the sum of (a) its organic growth rate and (b) 1/2 of its EBITDA margin equals or exceeds 20.

Generally speaking, an outcome of 20 or more, regardless of the different combinations of growth and profitability, indicates that the agency’s shareholders can expect to earn 15% -17% per year through stock price appreciation and/or shareholder distributions.

• Provides a tool to benchmark agency performance

• Helps frame the trade-off between growth and profitability

What is the Rule of 20?

Average +25% Profit Average +25% Growth Average

Rule of 20 18.2 24.1 23.5

Public BrokersOrganicGrowth

EBITDA Margin

Rule of 20 Outcome

Willis Group 4.9% 24.0% 16.9

Aon 3.0% 20.9% 13.5

Brown & Brown 6.8% 33.5% 23.6

Arthur J. Gallagher 6.5% 19.9% 16.5

Marsh & McLennan 3.0% 20.7% 13.4

Rule of 20 Outcome

Organic

Revenue

Growth

1/2 of

EBITDA

Margin

Rule of 20 Score +=

*Insufficient Data




17


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Total Number of Employees (FTE) 6.7 4.5 5.7

Revenue Per Employee $135,346 $214,865 $135,198

Compensation Per Employee $66,272 $78,802 $63,149

Spread Per Employee $69,074 $136,063 $72,049


Average number of Agency Employees that work remotely 1.3 * *

% of Agencies with Remote Workers 20.7% 3.4% 28.6%

Employee Productivity

Administrative Staff

Revenue Per Employee Compensation Per Employee Spread Per Employee$0

$50K

$100K

$150K

$200K

$250K$1

35,3

465

$

$214

,8655

$4

$135

,198

58

$

$66,

2722

6 $78,

802

,2

$

$63,

1499

3

$69,

0747

9

$136

,063

63

$

$72,

0494

7


Accounting & HR Department Info Average Top 25%

Accounting Department

Total Number of Employees in Accounting Department 0.7

High 2.0

Low 0.2

Revenue per Accounting Employee $905,092 $1,167,708

Total Payroll for Accounting Employees $29,802

Accounting Payroll as % of Net Revenue 3.3%

HR Department

Total Number of Employees in HR Department *

High *

Low *

Revenue per HR Employee * *

Total Payroll for HR Employees *

HR Payroll as % of Net Revenue *

*Insufficient Data

*Insufficient DataFor state association and Council fo



Agencieswith

RevenuesUnder

$1,250,000

18


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Most Successful Producer Productivity

Commercial P&C Group L&H

New Commissions Produced Annually Average $27,370 $12,647

Top 25% $51,714 *

Total Commissions in Producer’s Book Average $247,097 $28,156

Top 25% $484,631 *

Average Commissions per Account Average $1,779 $475

Top 25% $4,495 *


How Most Successful Producers Spent Time

Most SuccessfulCommercial P&C Producer

Most SuccessfulL&H Producer

PersonalTraining/Education/Prof. Dev.6.1%

Soliciting New Business31.4%

Mgmt/Personnel/Agency Admin.18.7%

ServicingExisting Accounts43.8%





Personal Lines Producers, someone whose main responsibility is to solicit and write new personal

lines accounts and is not responsible for the day-to-day servicing of the business, can be very

productive. On average the most successful Personal Lines Producer in this revenue category

generated $130,306 per year in new personal lines commissions with an average commission

per account of $251. (Typically, the total commissions in the producer’s book are not tracked

since they are not paid renewal commission. Most often, the producers receive a base salary plus

new business commissions.)

*Insufficient Data




19


Key Benchmarks

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Commercial P&C Producers

Average Validated Producers

# Validated 1.6

High 3.2

Low 1.0

Average New Commissions Produced Annually $33,020 $64,733

Average Book Serviced (Commissions) $174,263 $293,933

Average Pay ($) $61,306

Average Pay (% of Book Serviced) 32.5%

Group Life & Health Producers


# Validated 0.8

High 1.5

Low 0.3

Average New Commissions Produced Annually * *

Average Book Serviced (Commissions) $68,587 *



Personal P&C Producers


# Validated 1.1

High 2.0

Low 0.8





Multi-Line Producers


# Validated 2.1

High 5.0

Low 1.0





Validated Producer Productivity


% of Agencies That Reimburse All/Part T&E Expense 51.7% * 42.9%

*Insufficient Data



Agencieswith

RevenuesUnder

$1,250,000

20


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Where New Producers Were Found

UNDER age 30 from WITHINthe insurance industry

OVER age 30 from WITHINthe insurance industry

UNDER age 30 from OUTSIDEthe insurance industry

OVER age 30 from OUTSIDEthe insurance industry

+25% ProfitAverage +25% Growth

14.3%57.1%28.6%

0.0%

33.3%66.7%

0.0%0.0%

****

*Insufficient Data


New Producer Hiring

% of Agencies that Hired New Producers Last Year 20.7% * 42.9%

# of New Producers Hired Last Year 1.2 * 1.0

Average Annualized Wages per Producer Hired $44,075 * $33,150

% of Producers Hired Over Last 5 Years That Met Their Production Goals 73.9% 61.0% 90.0%

New Producers

*Insufficient Data


The NUPP

Expressed as a percentage of Net Revenue, the NUPP is the difference between what an agency pays its unvalidated producer(s) and what the producer(s) would earn under the agency’s normal commission schedule. A NUPP of 1.5% is considered a healthy level of investment.

3.9% * *

High 5.3%

Low 2.0%

By measuring pure payroll costs, the NUPP benchmark allows an “apples-to-apples” comparison with other agencies regarding the amount of direct investment an agency is making in new producers.

While the NUPP provides a general investment guideline, an agency should also consider the success rate of its new producers, i.e. the percentage of new producers hired during the past 5 year period that have achieved the sales goals set before them. By multiplying the NUPP by the producer success rate, an agency can further determine the effectiveness of its NUPP. High performing agencies typically achieve an Effective NUPP between 1.0% - 1.5%.

1An unvalidated producer is one whose production does not yet cover his/her wages

Net-investment in Unvalidated1 Producer Pay

Understanding the NUPP

*Insufficient Data




21


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Total # of Service Staff

(as defined above; excludes any TPA service staff) 3.8 3.0 2.8

% of Peer Agencies Having

Separate/Dedicated Marketing Department 3.4% 0.0% 0.0%

# of Marketing Staff 1.0 0.0 0.0

Separate/Dedicated Claims Department 6.9% 0.0% 0.0%

# of Claims Staff 1.5 0.0 0.0



Workers Comp TPA 0.0% 0.0% 0.0%

# of Service Staff * * *

Total TPA Revenues Serviced * * *

Group Benefits TPA 0.0% 0.0% 0.0%



TPA Service Staff

Service & Sales Support Staff Definition• Typically non-commissioned employees• Provide service to the agency’s clients• Support producers in the sale of new business and retention of existing business

Some service positions may earn commission income but typically a majority of their pay is fixed and a majority of their time is devoted to service rather than the soliciting of new clients.

Service & Sales Support Positions1 Included in Full-time Equivalent Headcounts• Account Executives (AE) - senior level service representatives• Account Managers, Customer Service Representatives (CSRs)• Assistant CSRs, Processors• Claims Staff• Placers/Marketers• Department Managers - who also service clients1Position titles are general categories since specific job titles vary from agency to agency

Administrative personnel such as accounting, mail room, and reception are not included in service benchmarks unless a portion of their time is dedicated to service.

*Insufficient Data

Service Staff Overview

Service Staff Productivity



Agencieswith

RevenuesUnder

$1,250,000

22


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Service/Sales Support StaffAverage Top 25%

Commercial P&C Service/Sales Support

Number 1.8

High 4.0

Low 0.5

Average Revenue per Staff $255,274 $404,940

Total Commercial Service Payroll ($) $87,098

Payroll (as % of Total Commercial Revenue) 25.5%

Bonds P&C Service/Sales Support Staff

Number *

High *

Low *

Average Revenue per Staff * *

Total Bond Service Payroll ($) *

Payroll (as % of Total Bond Revenue) *

Personal P&C Service/Sales Support Staff

Number 2.0

High 3.8

Low 0.5


Total Personal Service Payroll ($) $77,807

Payroll (as % of Total Personal Revenue) 25.8%

Group L&H Service/Sales Support Staff

Number 0.5

High 1.0

Low 0.3

Average Revenue per Staff $89,547 *

Total Group L&H Service Payroll ($) $15,557

Payroll (as % of Total Group L&H Revenue) 29.7%

Individual L&H Service/Sales Support Staff

Number 0.2

High 0.3

Low 0.1


Total Individual L&H Service Payroll ($) $9,799

Payroll (as % of Total Individual L&H Revenue) 22.3%

Multi-Line Service/Sales Support Staff

Number 3.6

High 6.5

Low 0.5


Total Multi-Line Service Payroll ($) $157,409

Payroll (as % of Total Multi-Line Revenue) 22.3%*Insufficient Data




23


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Service Staff Payroll InformationAverage +25% Profit +25% Growth

Pay Ranges by Service Position

AE

Average Low $43,060 * *Average High $48,985 * *

CSR

Average Low $40,510 $43,856 *Average High $44,293 $43,856 *

Processor/Asst CSR


Marketing

Average Low * * *Average High * * *

Claims


AE


CSR

Average Low $31,283 $33,510 $33,714Average High $36,349 $36,692 $37,029

Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


CO

MM

ER

CIA

L L

INE

SP

ER

SO

NA

L L

INE

SG

RO

UP

LIF

E &

HE

AL

TH

/FIN

AN

CIA

L

*Insufficient Data



Agencieswith

RevenuesUnder

$1,250,000

24


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Information Technology Employees (FTE)

Number 0.6

High 3.0

Low 0.1

Number of IT Employees per 100 users N/A

Revenue per IT Employee $657,966 $1,076,340

Total IT Payroll Expense ($) $14,419 $31,371

As % of Total Compensation Expense 3.3%

As % of Net Revenues 1.7%

1 Includes hardware/software leasing including offsite applications, supplies, maintenance & maintenance contracts, training, data lines, internet providers, website development/maintenance, outside consulting fees, computer depreciation, software amortization, and any non-depreciated hardware/software.

Other included ITC/INSPRO, NASA Eclispe, Jenesis, and No Agency Management System

Technology

Agency Management System Utilized


Total IT Expenses1 (as % of net revenues) 3.1% 2.9% 2.5%

AMS36027.6%

TAM27.6%

AFW6.9%

EPIC6.9%

Instar3.4%

SIS3.4%

Other13.8%

Hawksoft10.3%




25


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Service Center Use

Total Personal Lines Commission placed in Carrier Service Center 65.9% * *

Total Commercial Lines Commission placed in Carrier Service Center 55.6% * *

Use of Carrier Service Centers


Carrier Representation

Personal Lines P&C

National 5.0 6.3 5.4

Regional 4.7 2.7 3.7

Total 9.8 9.0 9.1

Commercial Lines P&C



Total 9.4 9.2 9.8

Group L&H / Financial

Total Life, Health, Disability, LTC,

Retirement Products, and Other5.3 3.3 4.8

Carriers


% of Total Commission & Fee Revenue Derived from Direct Versus Indirect Appointments

INDIRECT Carrier Appointments 15.7% 0.7% 17.1%

DIRECT Carrier Appointments 80.8% 85.0% 82.9%

Carrier Appointments

*Insufficient Data



Agencieswith

RevenuesUnder

$1,250,000

26


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


P&C Commission Income from Top Carriers

Top P&C Carrier $223,286 $317,502 $181,245

as % of Agency Net Revenue 28.3% 38.9% 28.8%

Top 3 P&C Carriers $414,132 $499,596 $323,687


Revenue from Top Insurance Carriers


L&H/F Commission Income from Top Carriers

as % of Net Rev from Top L&H/F Carrier 3.5% 1.7% 3.2%

as % of Net Rev from Top 3 L&H/F Carriers 5.5% 3.1% *

Top P&C Carrier—Breakdown By Line of Business

Top 3 P&C Carriers—Breakdown By Line of Business

*Insufficient Data

+25% ProfitAverage

Mid/LargeCommerical23.6%

Personal62.3%


Personal46.6%

SmallCommercial36.1%




Personal64.7%

+25% Growth


+25% Growth+25% ProfitAverage


Personal65.0%


Personal48.9%



Personal59.5%




27




28


Agencies with Revenues Between $1,250,000 and $2,500,000

$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000



Agencieswith RevenuesBetween $1,250,000 and $2,500,000

29


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Growth


Commercial P&C 8.3% 9.6% 14.0%

Personal P&C 7.5% 8.5% 16.4%


All Other Group 2.8% * *


Profit



Rule of 20 Score 23.7 30.3 35.3

Financial

Average Top 25%


Receivable/Payable Ratio 62.4% -14.8%



Productivity






Average Top 25%

Commercial P&C $57,126 $100,696

Personal P&C $22,124 $32,506

Life & Health/Financial $51,649 $80,523





Group Life & Health/Financial 68.5% 0.9

*Insufficient Data




Agencieswith Revenues

Between $1,250,000 and

$2,500,000

30


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Total Revenues: $1,879,106



Less than 50,000 35.7% 16.7% 50.0%

50,000 – 250,000 28.6% 50.0% 16.7%

250,000 – 1,000,000 10.7% 16.7% 0.0%

More than 1,000,000 25.0% 16.7% 33.3%

Corporate Structure

C 32.1% 33.3% 16.7%

S 42.9% 33.3% 16.7%


LLC 25.0% 33.3% 66.7%








Shareholders


High 6.0

Low 1.0



High 100.0%

Low 47.0%

Shareholder Age


Parent Corporation

Average





Other 0.0%

Member of Group


Other included The Iroquois Group, Georgia Agency Partners, Inc., North American Insurance Brokers,

Select Prism, Combined Agents of America, Memphis Insurance Group, and Secure Risk/Shared Agency

Services.





31


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Revenues



Property & Casualty


Bonds 3.3% 6.3% 1.5%




Total P&C 89.7% 85.5% 85.6%









Gross Revenues 100.0% 100.0% 100.0%


Net Revenues 98.5% 100.0% 95.3%

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees


P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees



L&HBonus/

Overrides







$2,500,000

32


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



Average $141,322 Average 1.59x

High $240,525 High 2.00x

Low $80,000 Low 1.25x

Acquired Revenues

% of Agencies

Acquiring

Average

Commissions

Acquired

% of

Net Revenues





Product Specialty/Niche57.1% 66.7% 83.3%

Total Commissions & Fees Generated from All Specialties/Niches $382,669 $629,573 $115,084

Total Specialty/Niche Revenue as % of Net Revenues 15.1% * 6.0%

*Insufficient Data

Specialty/Niche Revenue as % of Net Revenue


5%

10%

15%

20%

25%

15.1%

6.0%

0%




33


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




High 11.8%

Low 1.2%


High 33.1%

Low 2.9%



Life 26.4% * 24.3%

Disability 14.7% * 16.0%

Dental & Vision 25.5% * 28.7%

Retirement/Pension 7.8% * 0.0%

Worksite/Voluntary/Supplement 14.7% * 0.0%

Long-Term Care 2.0% * 1.3%

Employee Benefits TPA 9.0% * 29.7%

All Other 0.0% * 0.0%

*Insufficient Data






$2,500,000

34


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Commercial P&C


% of Book 22.0% 44.0% 35.0%

# of Accounts 6.7 12.3 9.8

Total Revenue $282,238 $414,681 $473,533


Between $10,000 and $25,000

% of Book 15.0% 20.7% 15.8%

# of Accounts 13.0 19.6 15.6

Total Revenue $178,750 $233,872 $213,877


Between $5,000 and $10,000

% of Book 16.1% 16.9% 19.7%

# of Accounts 30.5 30.2 46.2

Total Revenue $191,520 $190,771 $266,655


Less than $5,000

% of Book 46.9% 18.5% 29.4%

# of Accounts 1,350.5 268.6 879.0

Total Revenue $556,942 $208,988 $396,977



Group L&H/Financial

Over 100 Lives

% of Book 18.0% 49.3% 29.8%

# of Accounts 2.3 2.7 2.3

Total Revenue $82,011 $103,000 $115,000


50 - 100 Lives

% of Book 15.8% 20.3% 13.5%


Total Revenue $43,546 $42,333 $52,000


25 - 50 Lives

% of Book 14.6% 16.8% 14.4%


Total Revenue $48,268 $35,000 $41,500


Under 25 Lives

% of Book 51.6% 13.6% 42.3%

# of Accounts 72.4 * 25.8

Total Revenue $48,921 * $46,995

Revenue per Account $649 * $4,747

*Insufficient Data




35


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


*Insufficient Data


Commercial P&C

Renewals1 95.2% 95.7% 97.2%

New Business2 13.1% 13.9% 16.8%



Total Growth5 8.9% 9.6% 14.4%

Bonds P&C

Renewals1 68.8% 62.5% 93.3%

New Business2 38.9% 47.2% 34.7%



Total Growth5 8.2% 9.7% 28.0%

Personal P&C

Renewals1 97.6% 97.8% 105.3%

New Business2 9.9% 10.7% 11.1%



Total Growth5 9.3% 8.5% 20.5%


Renewals1 77.3% * *



Organic Growth4 24.5% * *

Total Growth5 24.5% * *






*Insufficient Data





$2,500,000

36


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


*Insufficient Data


Group Medical L&H

Renewals1 92.4% 95.6% 105.9%

New Business2 8.8% 8.5% 11.9%



Total Growth5 1.2% 4.1% 18.0%

All Other Group L&H

Renewals1 52.6% * *



Organic Growth4 2.8% * *

Total Growth5 2.8% * *

Individual L&H

Renewals1 67.4% 48.8% 69.4%

New Business2 32.8% 28.6% 14.9%


Organic Growth4 0.2% -22.7% -15.7%

Total Growth5 0.2% -22.7% -15.7%


Renewals1 93.5% 84.3% 101.3%

New Business2 15.0% 24.7% 15.6%



Total Growth5 9.7% 9.0% 18.5%

Brokerage Commission Expense Growth 10.0% * *

Net Commissions & Fees Growth (Organic)6 8.5% 9.0% 16.5%

Net Commissions & Fees Growth (Total)7 9.6% 9.0% 18.1%

Other Income

P&C Contingent Income Growth 25.5% 27.9% 34.6%

L&H Bonus Income Growth 6.8% * *

Investment Income Growth -8.8% * *
















37


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Surety-Bonding 17.9%1

Personal P&C 78.6%

67.9%6Small Commercial P&C

Individual Life & Health 21.4%

Group Medical/Health Insurance 21.4%

25.0%0All Other Group Benefits

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007 2008 2009 2010 2011 2012 2013 2014

10%

–10%

20%

30%

40%

10.4%

6.4%

20.7%

6.2%

11.4%

20.2%

5.7%

18.9%18 9%

23.8%

–0.2%

–1.0%

8.4%8.4%

–2.0% –1.2%

10.9%

1.3%2.6%

12.1%9.1% 10.4%

23.8%

10.5%11.8%

18.9%18 9%

0%






$2,500,000

38


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix






Total Payroll 46.8% 35.5% 39.4%







Selling Expenses




Total Auto 1.2% 1.5% 0.7%



Operating Expenses









Total IT 2.4% 1.5% 1.8%

Telephone 0.9% 0.6% 0.7%

Postage 0.4% 0.4% 0.3%




Insurance 1.4% 1.1% 1.0%


Bad Debts 0.1% 0.4% 0.5%









39


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Interest 0.4% 0.2% 0.5%

Other 0.0% 0.1% 0.0%




EBITDA 25.1% 37.7% 32.1%



Compensation Expense 8.4% 4.7% 10.0%

Selling Expense 9.3% 13.9% 8.8%


Administrative Expense -12.2% * -7.8%



*Insufficient Data


10%

20%

30%

40%

50%


4.2%4.2% 4.7% 3.7%3 7%

16.1%16 1% 16.1%16 1% 17.8%17.8%

1.4%1 4% 0.5%0 %3.2%

55.3%55 3%

47.8%47 8%

41.7%41 7%





$2,500,000

40


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Bonds 3.3% 6.3% 1.5%


VAS - P&C 0.1% 0.2% 0.2%








Total Revenues 100.0% 100.0% 100.0%


Net Revenues 98.5% 100.0% 95.3%



Selling 4.2% 4.7% 3.7%

Operating 16.1% 16.1% 17.8%




Pre-Tax Profit 23.0% 37.0% 27.5%



EBITDA3 25.1% 37.7% 32.1%






Profit/Loss Summary





41


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Profitability






5%

10%

15%

20%

25%

30%

35%

0%2008


23.2%23 2%

30.1%

26.7%%

34.0%

7.8%

23.5%23.5%

6.4%6 4%

27.7%27.7%

7.4%

23.4%

8.0%

23.0%23.0%

9.2%12.2%12 2%

24.6%25.1%

30.6%

12.8%12 8% 13.3%13.3%

20102007 2009 2011 2012 2013 2014

Pro Forma EBITDA

23.3%

29.3%27.0%27.0% 27.4%27.4%

31.1%





$2,500,000

42


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Balance Sheet



Receivables/Payable Ratio 62.4% -14.8%

Aged Receivables







Financial Stability

Accounts Receivable







Rule of 20 23.7 30.3 35.3


EBITDA Margin

Rule of 20 Outcome

Willis Group 4.9% 24.0% 16.9

Aon 3.0% 20.9% 13.5

Brown & Brown 6.8% 33.5% 23.6



Rule of 20 Outcome

Organic

Revenue

Growth

1/2 of

EBITDA

Margin

Rule of 20 Score +=




43


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix







Average number of Agency Employees that work remotely 1.3 1.0 1.4



Administrative Staff Accounting & HR Department Info Average Top 25%



High 1.6

Low 0.5

Revenue per Accounting Employee $1,768,008 $2,295,490



HR Department

Total Number of Employees in HR Department 0.4

High 0.8

Low 0.2

Revenue per HR Employee $1,970,281 *

Total Payroll for HR Employees $27,893

HR Payroll as % of Net Revenue 1.5%

*Insufficient Data


$50K

$100K

$150K

$200K

$250K$1

48,8

458

4$

$200

,208

22

$179

,633

93

$

$80,

893

,3

$ $82,

2800

$84,

092

49

$67,

9515

6

$117

,9272

$

$95,

541

94






$2,500,000

44


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Top 25% $109,428 $131,095


Top 25% $865,160 $458,333

Average Commissions per Account Average $3,811 $2,955

Top 25% $7,990 $7,184



Personal Lines Producers, someone whose main responsibility is to solicit and write new personal lines accounts and is not responsible for the day-to-day servicing of the business, can be very productive. On average the most successful Personal Lines Producer in this revenue category generated $27,972 per year in new personal lines commissions with an average commission per account of $274. (Typically, the total commissions in the producer’s book are not tracked since they are not paid renewal commission. Most often, the producers receive a base salary plus new business commissions.)














45


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%



# Validated 2.7

High 7.3

Low 1.0







# Validated 1.1

High 2.0

Low 0.5







# Validated 1.8

High 5.0

Low 1.0







# Validated 3.4

High 8.0

Low 1.0

Average New Commissions Produced Annually $81,170 *






% of Agencies That Reimburse All/Part T&E Expense 71.4% 83.3% 50.0%

*Insufficient Data





$2,500,000

46


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



New Producer Hiring

% of Agencies that Hired New Producers Last Year 32.1% * *

# of New Producers Hired Last Year 1.2 * *

Average Annualized Wages per Producer Hired $51,136 * *


New Producers

*Insufficient Data

Average +25% Profit +25% GrowthThe NUPP


2.7% * *

High 5.0%

Low 0.1%






*Insufficient Data






18.2%54.5%0.0%

27.3%

****

****

*Insufficient Data *Insufficient Data




47


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

















TPA Service Staff





*Insufficient Data







$2,500,000

48


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Service/Sales Support Staff

Average Top 25%


Number 3.8

High 10.0

Low 2.0





Number 0.7

High 1.0

Low 0.1


Total Bond Service Payroll ($) $29,235

Payroll (as % of Total Bond Revenue) 16.6%


Number 2.9

High 7.0

Low 0.5





Number 0.9

High 1.5

Low 0.4





Number 0.6

High 1.0

Low 0.5





Number *

High *

Low *


Total Multi-Line Service Payroll ($) *

Payroll (as % of Total Multi-Line Revenue) **Insufficient Data




49


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


CO

MM

ER

CIA

L L

INE

SP

ER

SO

NA

L L

INE

SG

RO

UP

LIF

E &

HE

AL

TH

/FIN

AN

CIA

L

*Insufficient Data





$2,500,000

50


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%


Number 0.7

High 1.5

Low 0.1


Revenue per IT Employee $1,775,631 $2,370,011





Technology




TAM57.1%

AMS36032.1%

EPIC10.7%




51


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Service Center Use






Personal Lines P&C



Total 10.8 7.4 12.2


National 8.5 5.2 14.2


Total 16.5 9.8 22.0




Carriers






*Insufficient Data





$2,500,000

52


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



Top P&C Carrier $462,570 $489,014 $449,639


Top 3 P&C Carriers $783,827 $733,637 $760,310








as % of Net Rev from Top 3 L&H/F Carriers 8.3% 11.0% 12.7%

+25% ProfitAverage


Personal17.4%


Personal39.0%





Personal45.0%

+25% Growth




Personal23.0%


Personal39.7%



Personal37.2%




53




54



$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000




55


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Growth


Commercial P&C 7.5% 6.5% 15.8%

Personal P&C 5.5% 3.6% 9.0%

Group Medical -3.5% -1.5% -3.3%

All Other Group -7.9% * 12.3%


Profit



Rule of 20 Score 20.8 26.8 25.7

Financial

Average Top 25%




Accounts Receivables > 90 Days 5.9% -0.9%

Productivity






Average Top 25%

Commercial P&C $66,268 $121,036

Personal P&C $47,682 $95,934







*Insufficient Data






$5,000,000

56


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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Less than 50,000 29.2% 54.5% 36.4%

50,000 – 250,000 35.4% 18.2% 27.3%

250,000 – 1,000,000 10.4% 0.0% 18.2%

More than 1,000,000 25.0% 27.3% 18.2%

Corporate Structure

C 14.6% 27.3% 0.0%

S 62.5% 27.3% 63.6%


LLC 18.8% 36.4% 18.2%








Shareholders


High 7.0

Low 1.0



High 100.0%

Low 25.0%

Shareholder Age


Parent Corporation

Average

Other included commercial P&C agency and holding company.





Other 50.0%

Member of Group


Other included Combined Agents of America, Trusted Insurance Alliance, CAA, Secure Risk/Shared Agency Services, Keystone Insurance Group, ARM of Illinois, Consolidated Insurance Agents, Assuralliance, and

Northlake Insurance Group.





57


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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Revenues



Property & Casualty


Bonds 1.9% 0.7% 1.2%




Total P&C 90.4% 94.7% 91.9%









Gross Revenues 100.0% 100.0% 100.0%


Net Revenues 98.6% 97.6% 98.8%

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees


P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees



L&HBonus/

Overrides







$5,000,000

58


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




High $750,000 High 1.85x

Low $90,100 Low 1.0x

Acquired Revenues

% of Agencies

Acquiring

Average

Commissions

Acquired

% of

Net Revenues






Total Commissions & Fees Generated from All Specialties/Niches $1,094,029 $1,647,837 $882,661

Total Specialty/Niche Revenue as % of Net Revenues 29.1% 46.6% 15.6%



10%

20%

30%

40%

50%

29.1%

15.6%

0%

46.6%




59


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




High 24.5%

Low 0.7%


High 43.1%

Low 2.5%



Life 27.8% 58.0% 40.0%

Disability 16.7% 0.3% 18.2%

Dental & Vision 25.9% 8.3% 16.9%

Retirement/Pension 6.4% 0.0% 17.6%

Worksite/Voluntary/Supplement 6.8% 0.0% 3.3%

Long-Term Care 2.5% 8.3% 3.7%

Employee Benefits TPA 4.4% 0.0% 0.0%

All Other 9.6% 25.0% 0.3%






$5,000,000

60


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Commercial P&C


% of Book 29.9% 21.5% 25.5%

# of Accounts 12.3 9.4 11.5

Total Revenue $698,258 $535,548 $601,222


Between $10,000 and $25,000

% of Book 17.0% 12.7% 16.7%

# of Accounts 24.6 18.7 25.3

Total Revenue $379,540 $284,293 $392,951


Between $5,000 and $10,000

% of Book 13.1% 12.0% 12.5%

# of Accounts 41.2 38.5 39.6

Total Revenue $291,869 $269,778 $294,178


Less than $5,000

% of Book 40.0% 53.8% 45.4%

# of Accounts 1,660.9 2,872.5 2,042.8

Total Revenue $893,749 $1,208,670 $1,069,882



Group L&H/Financial

Over 100 Lives

% of Book 32.0% 14.9% 38.2%


Total Revenue $198,980 $48,792 $178,232


50 - 100 Lives

% of Book 21.5% 19.0% 25.2%

# of Accounts 9.3 10.2 13.2

Total Revenue $106,004 $37,404 $94,050


25 - 50 Lives

% of Book 14.2% 8.9% 20.5%

# of Accounts 13.0 4.8 18.0

Total Revenue $64,730 $17,586 $76,496


Under 25 Lives

% of Book 32.3% 57.2% 16.0%

# of Accounts 120.6 72.0 47.6

Total Revenue $112,154 $62,503 $42,608





61


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Service Staff Info

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Insurance Carriers

Appendix


*Insufficient Data


Commercial P&C

Renewals1 94.1% 93.6% 97.5%

New Business2 13.4% 12.9% 18.3%



Total Growth5 7.9% 6.6% 15.8%

Bonds P&C

Renewals1 61.1% 81.7% 46.9%

New Business2 37.7% 29.4% 45.2%


Organic Growth4 -1.2% 11.1% -7.9%

Total Growth5 -1.2% 11.1% -7.9%

Personal P&C

Renewals1 92.6% 91.3% 96.0%

New Business2 12.9% 12.3% 13.0%



Total Growth5 6.2% 3.6% 9.0%


Renewals1 51.9% * *










*Insufficient Data





$5,000,000

62


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


*Insufficient Data


Group Medical L&H

Renewals1 87.2% 91.1% 87.7%

New Business2 9.3% 7.4% 9.0%


Organic Growth4 -3.5% -1.5% -3.3%

Total Growth5 -3.5% -1.5% -3.3%

All Other Group L&H

Renewals1 77.8% * 97.4%



Organic Growth4 -7.9% * 12.3%

Total Growth5 -7.9% * 12.3%

Individual L&H

Renewals1 65.6% 77.5% 74.5%

New Business2 31.5% 16.3% 45.4%


Organic Growth4 -2.9% -6.2% 19.8%

Total Growth5 -2.3% -6.2% 19.8%


Renewals1 92.9% 92.7% 95.6%

New Business2 13.5% 12.5% 16.9%



Total Growth5 7.5% 5.2% 13.9%

Brokerage Commission Expense Growth -3.8% 13.7% *



Other Income


L&H Bonus Income Growth 13.4% -27.7% *

Investment Income Growth -6.5% * -4.3%
















63


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Personal P&C 81.3%





0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007 2008 2009 2010 2011 2012 2013 2014

10%

–10%

20%

30%

40%

15.7%14.1%

31.3%

0.6%4.1%

12.1%

–1.6%

0.7%

10.0%

0.2%

–1.3%

6.7%6 7%

1.1%3.6%

12.5%

3.0%

7.6%7 6%12.2%

9.5%11.7%

20.0%

7.8%7 8% 6.0%6 0%

19.1%19.1%

0%






$5,000,000

64


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix






Total Payroll 50.3% 41.4% 52.4%







Selling Expenses




Total Auto 1.1% 0.4% 1.3%



Operating Expenses









Total IT 2.1% 1.6% 2.5%

Telephone 0.7% 0.6% 0.7%

Postage 0.4% 0.5% 0.5%




Insurance 1.5% 1.4% 1.3%


Bad Debts 0.1% 0.3% 0.1%









65


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Interest 0.7% 0.5% 0.6%

Other 0.3% 0.0% 0.0%




EBITDA 23.6% 37.1% 20.2%






Administrative Expense -3.8% -1.5% 8.3%




10%

20%

30%

40%

50%


3.9%3 9% 2.1%2 1% 4.0%

14.1%11.6%11 6%

14.8%

2.7%2 7% 1.7%1 7% 2.2%2 2%

58.8%58.8%61.3%

49.4%





$5,000,000

66


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Bonds 1.9% 0.7% 1.2%


VAS - P&C 0.2% 0.1% 0.0%








Total Revenues 100.0% 100.0% 100.0%


Net Revenues 98.6% 97.6% 98.8%



Selling 3.9% 2.1% 4.0%

Operating 14.1% 11.6% 14.8%




Pre-Tax Profit 20.5% 35.2% 17.6%



EBITDA3 23.6% 37.1% 20.2%






Profit/Loss Summary





67


Key Benchmarks

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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Profitability






5%

10%

15%

20%

25%

30%

35%

0%2008


23.2%23 2%

33.5%33 5%

28.4%25.3%

8.9%

21.1%

5.8%

18.3% 18.9%

6.2%

18.6%

6.0%

9.0%

22.4%22 4%23.6%

27.9%

10.4%12.8%12.8%

20102007 2009 2011 2012 2013 2014

Pro Forma EBITDA

20.3%

23.2%23.0%23 0%

24.4%

27.1%27.1%

2.2%2 2%





$5,000,000

68


Key Benchmarks

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Balance Sheet




Aged Receivables


% Receivables Aged Past 90 Days 5.9% -0.9%





Financial Stability

Accounts Receivable







Rule of 20 20.8 26.8 25.7


EBITDA Margin

Rule of 20 Outcome

Willis Group 4.9% 24.0% 16.9

Aon 3.0% 20.9% 13.5

Brown & Brown 6.8% 33.5% 23.6



Rule of 20 Outcome

Organic

Revenue

Growth

1/2 of

EBITDA

Margin

Rule of 20 Score +=




69


Key Benchmarks

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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix













High 2.5

Low 0.2




HR Department


High 1.0

Low 0.2

Revenue per HR Employee $3,595,102 $4,539,036




$50K

$100K

$150K

$200K

$250K$1

56,5

951

5

$170

,2535

7

$139

,829

92

$

$92,

306

90

$86,

511

61

$85,

039

5

$64,

2898

4 $83,

742

34


$$54,

790

7$





$5,000,000

70


Key Benchmarks

Profile

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Top 25% $160,303 $87,090


Top 25% $1,051,779 $700,460


Top 25% $14,282 $12,506























71


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Employee Overview

Producer Info

Service Staff Info

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Insurance Carriers

Appendix

Average Top 25%



# Validated 4.0

High 8.0

Low 1.0







# Validated 1.4

High 4.0

Low 0.3







# Validated 3.1

High 11.0

Low 1.0







# Validated 3.0

High 10.0

Low 1.0












$5,000,000

72


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



New Producer Hiring

% of Agencies that Hired New Producers Last Year 45.8% 45.5% 63.6%

# of New Producers Hired Last Year 1.5 1.6 1.1

Average Annualized Wages per Producer Hired $49,901 $44,615 $51,369


New Producers



1.2% 1.0% 1.3%

High 2.7%

Low 0.3%











28.1%21.9%31.3%18.8%

25.0%37.5%12.5%25.0%

50.0%25.0%12.5%12.5%




73


Key Benchmarks

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

















TPA Service Staff





*Insufficient Data







$5,000,000

74


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Average Top 25%


Number 6.9

High 17.0

Low 2.3





Number 1.1

High 4.0

Low 0.2





Number 5.1

High 14.0

Low 0.5





Number 1.3

High 4.0

Low 0.2





Number 0.6

High 2.0

Low 0.1





Number *

High *

Low *







75


Key Benchmarks

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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


AE

Average Low $61,665 * $63,353Average High $63,772 * $63,353

CSR


Processor/Asst CSR


Marketing


Claims


CO

MM

ER

CIA

L L

INE

SP

ER

SO

NA

L L

INE

SG

RO

UP

LIF

E &

HE

AL

TH

/FIN

AN

CIA

L

*Insufficient Data





$5,000,000

76


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%


Number 0.8

High 2.6

Low 0.0







Technology




Other included Xanatek-IMS, Navigator, and Custom

TAM39.6%

AMS36037.5%

EPIC8.3%

Other4.2%

AFW2.1%

Instar2.1%

Vision2.1%

DORIS2.1%

Sagitta2.1%




77


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Insurance Carriers

Appendix


Service Center Use






Personal Lines P&C

National 6.5 6.9 10.4

Regional 8.0 7.6 14.3

Total 14.4 14.5 24.7


National 12.0 13.1 14.3

Regional 12.6 9.8 15.7

Total 24.6 22.9 30.0




Carriers






*Insufficient Data





$5,000,000

78


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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



Top P&C Carrier $657,900 $580,046 $601,016


Top 3 P&C Carriers $1,261,779 $1,243,216 $1,091,726









+25% ProfitAverage


Personal41.2%


Personal38.3%





Personal37.9%

+25% Growth




Personal42.5%


Personal36.8%



Personal39.7%




79




80



$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000




81


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Insurance Carriers

Appendix


Growth


Commercial P&C 11.3% 14.0% 21.5%

Personal P&C 5.3% 5.3% 7.3%

Group Medical -2.0% -2.4% -0.7%

All Other Group 3.9% 2.3% -17.3%


Profit



Rule of 20 Score 20.3 27.7 29.5

Financial

Average Top 25%





Productivity






Average Top 25%

Commercial P&C $73,374 $146,073

Personal P&C $37,952 $59,620












$10,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Less than 50,000 29.7% 22.2% 22.2%

50,000 – 250,000 21.6% 33.3% 22.2%

250,000 – 1,000,000 13.5% 22.2% 11.1%

More than 1,000,000 35.1% 22.2% 44.4%

Corporate Structure

C 19.4% 22.2% 22.2%

S 63.9% 55.6% 66.7%

Partnership 5.6% 11.1% 11.1%

LLC 11.1% 11.1% 0.0%








Shareholders


High 9.0

Low 1.0



High 100.0%

Low 12.5%

Shareholder Age


Parent Corporation

Average





Other 0.0%

Member of Group


Other included Insurance & Risk Managers, Northern United Agents Alliance, ISU, Insurors Group, Combined Agents of America, Assurex Global, Keystone Insurers

Group, Benefi ts Advisors Network, and Intersure.





83


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Insurance Carriers

Appendix

Revenues



Property & Casualty


Bonds 1.4% 0.3% 0.6%




Total P&C 86.5% 88.4% 85.7%









Gross Revenues 100.0% 100.0% 100.0%


Net Revenues 99.0% 100.0% 99.9%

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees


P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees



L&HBonus/

Overrides







$10,000,000

84


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




High $327,948 High 1.5x

Low $16,450 Low 1.5x

Acquired Revenues

% of Agencies

Acquiring

Average

Commissions

Acquired

% of

Net Revenues






Total Commissions & Fees Generated from All Specialties/Niches $1,749,439 $1,753,701 $2,404,538




10%

20%

30%

40%

50%

26.2%

33.9%

0%

29.4%




85


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Insurance Carriers

Appendix




High 10.8%

Low 0.8%


High 34.3%

Low 2.5%



Life 31.2% 33.5% 42.7%

Disability 15.8% 11.8% 12.8%

Dental & Vision 27.6% 14.5% 22.5%





All Other 3.5% 0.0% 2.0%






$10,000,000

86


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Technology

Insurance Carriers

Appendix


Commercial P&C


% of Book 33.8% 32.4% 38.4%

# of Accounts 25.8 19.6 27.7

Total Revenue $1,464,122 $1,178,350 $1,576,056


Between $10,000 and $25,000

% of Book 17.0% 14.9% 17.2%

# of Accounts 47.8 36.0 46.6

Total Revenue $738,105 $543,221 $705,875


Between $5,000 and $10,000

% of Book 12.0% 12.0% 12.7%

# of Accounts 74.4 64.4 73.2

Total Revenue $521,145 $437,363 $521,224


Less than $5,000

% of Book 37.2% 40.7% 31.8%

# of Accounts 3,051.3 3,239.8 2,103.0

Total Revenue $1,613,382 $1,482,380 $1,305,340



Group L&H/Financial

Over 100 Lives

% of Book 33.8% 37.7% 33.8%

# of Accounts 10.8 10.0 11.2

Total Revenue $465,918 $598,145 $472,804


50 - 100 Lives

% of Book 17.4% 13.9% 21.9%

# of Accounts 11.8 10.0 14.0

Total Revenue $200,081 $176,817 $261,983


25 - 50 Lives

% of Book 17.1% 12.1% 16.4%

# of Accounts 21.5 19.6 22.6

Total Revenue $188,941 $152,963 $196,568


Under 25 Lives

% of Book 31.7% 36.3% 27.9%

# of Accounts 228.2 145.7 182.9

Total Revenue $324,330 $383,441 $334,944





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Insurance Carriers

Appendix


*Insufficient Data


Commercial P&C

Renewals1 97.7% 103.7% 102.8%

New Business2 13.4% 10.3% 18.7%


Organic Growth4 11.3% 14.0% 21.5%

Total Growth5 11.7% 14.0% 21.8%

Bonds P&C

Renewals1 60.1% 82.5% 45.2%

New Business2 32.1% 13.9% 40.7%


Organic Growth4 -7..8% -3.6% -14.1%

Total Growth5 -7.2% -3.6% -14.1%

Personal P&C

Renewals1 94.5% 95.1% 94.5%

New Business2 10.7% 10.2% 12.8%



Total Growth5 6.1% 5.4% 8.7%


Renewals1 83.8% 94.0% 95.2%

New Business2 17.2% 13.9% 16.6%



Total Growth5 0.9% 7.9% 11.8%










$10,000,000

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Insurance Carriers

Appendix


*Insufficient Data


Group Medical L&H

Renewals1 85.8% 89.9% 86.5%

New Business2 12.3% 7.7% 12.8%


Organic Growth4 -2.0% -2.4% -0.7%

Total Growth5 -1.6% -2.4% 1.0%

All Other Group L&H

Renewals1 88.1% 94.1% 70.9%

New Business2 15.8% 8.2% 11.9%

Acquired Revenues3 -0.1% 0.0% 0.0%

Organic Growth4 3.9% 2.3% -17.3%

Total Growth5 3.8% 2.3% -17.3%

Individual L&H

Renewals1 46.2% 32.0% 39.5%

New Business2 45.3% 54.2% 73.1%


Organic Growth4 -8.5% -13.8% 12.6%

Total Growth5 -8.5% -13.8% 12.6%


Renewals1 94.4% 98.3% 98.1%

New Business2 13.3% 10.9% 17.4%



Total Growth5 8.4% 9.3% 16.4%

Brokerage Commission Expense Growth -1.3% * *



Other Income


L&H Bonus Income Growth -10.2% * -8.1%

Investment Income Growth -1.8% -10.3% -15.6%
















89


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Personal P&C 78.4%7



Group Medical/Health Insurance 64.9%9


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007 2008 2009 2010 2011 2012 2013 2014

10%

–10%

20%

30%

40%

12.0%14.4%

21.0%

4.3% 5.9%

12.4%

0.2% 1.0%

7.7%7 7%

0.3% 0.9%

11.0%

–6.0%

0.7%

7.5%7 5%3.2% 4.3%

9.6% 8.9%8 9% 9.2%

18.8%18 8%

8.1%8 1% 9.5%

17.4%17 4%

0%






$10,000,000

90


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix






Total Payroll 53.2% 50.1% 51.0%







Selling Expenses




Total Auto 0.9% 1.0% 1.1%



Operating Expenses









Total IT 2.1% 1.9% 2.0%

Telephone 0.7% 0.6% 0.5%

Postage 0.4% 0.4% 0.4%




Insurance 1.5% 1.5% 1.1%


Bad Debts 0.1% 0.0% 0.1%









91


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Interest 1.0% 0.9% 1.7%

Other 0.0% 0.1% -0.2%




EBITDA 21.2% 28.2% 26.9%






Administrative Expense 0.3% 0.6% 6.2%




10%

20%

30%

40%

50%


3.2%3 2% 2.7%2 7% 3.0%3 0%

14.5% 12.5%12 5% 12.3%12 3%

2.6%2 6% 1.9%1 9%3.5%3.5%

61.7%58.4%

56.9%For state association and Council fo





$10,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Bonds 1.4% 0.3% 0.6%


VAS - P&C 1.7% 5.5% 5.6%








Total Revenues 100.0% 100.0% 100.0%


Net Revenues 99.0% 100.0% 99.9%



Selling 3.2% 2.7% 3.0%

Operating 14.5% 12.5% 12.3%




Pre-Tax Profit 18.0% 26.0% 22.8%



EBITDA3 21.2% 28.2% 26.9%






Profit/Loss Summary





93


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Employee Overview

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Service Staff Info

Technology

Insurance Carriers

Appendix

Profitability






5%

10%

15%

20%

25%

30%

35%

0%2008


18.4%

29.5%

24.7%22.9%22 9% 22.9%22 9%

4.5%

20.7%

6.5%

17.6% 16.8%6 8%

3.4%

16.3%6 3%

3.7%5.5%

21.0% 21.2%21 2%

25.1%

9.6%10.1%

20102007 2009 2011 2012 2013 2014

Pro Forma EBITDA

16.6%6 6%

21.0% 21.9%

25.2%





$10,000,000

94


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Expenses

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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Balance Sheet




Aged Receivables







Financial Stability

Accounts Receivable







Rule of 20 20.3 27.7 29.5


EBITDA Margin

Rule of 20 Outcome

Willis Group 4.9% 24.0% 16.9

Aon 3.0% 20.9% 13.5

Brown & Brown 6.8% 33.5% 23.6



Rule of 20 Outcome

Organic

Revenue

Growth

1/2 of

EBITDA

Margin

Rule of 20 Score +=




95


Key Benchmarks

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix













High 5.0

Low 0.2




HR Department


High 2.0

Low 0.1





$50K

$100K

$150K

$200K

$250K$1

69,2

979$

9

$215

,8333

$5

$186

,611

6$

$104

,5633

1,

$125

,9669

1

$110

,7400

$0

$64,

7333

4 $89,

868

96


$75,

871

8For state association and Council fo





$10,000,000

96


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Top 25% $217,036 $177,653


Top 25% $1,677,304 $1,204,505


Top 25% $30,116 $18,891























97


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Expenses

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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%



# Validated 6.5

High 17.0

Low 2.0







# Validated 1.6

High 4.0

Low 1.0







# Validated 2.2

High 8.0

Low 0.5







# Validated 4.1

High 12.0

Low 1.0












$10,000,000

98


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Expenses

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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



New Producer Hiring





New Producers



1.1% * 0.7%

High 3.5%

Low 0.1%






*Insufficient Data






12.5%25.0%18.8%43.8%

20.0%0.0%

20.0%60.0%

25.0%25.0%12.5%37.5%




99


Key Benchmarks

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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix















# of Service Staff 2.2 * *

Total TPA Revenues Serviced $109,718 * *

TPA Service Staff





*Insufficient Data







$10,000,000

100


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Average Top 25%


Number 13.5

High 27.0

Low 3.5





Number 1.4

High 4.0

Low 0.1





Number 9.5

High 31.6

Low 1.0





Number 2.8

High 6.5

Low 0.4





Number 0.9

High 2.0

Low 0.1





Number *

High *

Low *







101


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



AE


CSR


Processor/Asst CSR


Marketing

Average Low $53,806 * $49,315Average High $71,774 $66,873 $68,946

Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


CO

MM

ER

CIA

L L

INE

SP

ER

SO

NA

L L

INE

SG

RO

UP

LIF

E &

HE

AL

TH

/FIN

AN

CIA

L

*Insufficient Data





$10,000,000

102


Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%


Number 1.2

High 2.3

Low 0.2







Technology




TAM56.8%

AMS36016.2%

EPIC13.5%

Sagitta8.1%

AFW2.7%

Vision2.7%




103


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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Service Center Use

Total Personal Lines Commission placed in Carrier Service Center 28.0% 29.5% 32.8%

Total Commercial Lines Commission placed in Carrier Service Center 5.6% 6.0% 3.7%




Personal Lines P&C

National 11.7 10.8 14.0


Total 19.9 20.3 22.3


National 14.4 13.6 11.0

Regional 12.5 13.0 9.6

Total 26.8 26.6 20.6




Carriers










$10,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



Top P&C Carrier $1,076,195 $1,174,964 $1,101,475


Top 3 P&C Carriers $2,025,213 $2,078,334 $1,992,976









+25% ProfitAverage


Personal30.2%


Personal32.5%





Personal25.4%

+25% Growth




Personal38.3%


Personal35.1%



Personal26.4%




105




106



$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000




107


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Growth


Commercial P&C 10.7% 8.9% 17.4%

Personal P&C 7.4% 10.6% 6.9%


All Other Group 1.0% 11.0% -1.1%


Profit



Rule of 20 Score 20.3 23.6 28.8

Financial

Average Top 25%





Productivity






Average Top 25%

Commercial P&C $91,816 $183,692

Personal P&C $54,898 $94,922












$25,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Less than 50,000 11.8% 14.3% 12.5%

50,000 – 250,000 14.7% 0.0% 12.5%

250,000 – 1,000,000 38.2% 57.1% 12.5%

More than 1,000,000 35.3% 28.6% 62.5%

Corporate Structure

C 22.9% 25.0% 0.0%

S 51.4% 25.0% 62.5%


LLC 22.9% 50.0% 25.0%








Shareholders


High 24.0

Low 1.0



High 100.0%

Low 10.0%

Shareholder Age


Parent Corporation

Average

Other included AAA and holding company.





Other 33.3%

Member of Group


Other included ARM, ResourcePro, Intersure, Assurex Global, Globex, United Benefi t Advisors, C2 Centric,

Lionstreet and SIAA.





109


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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Revenues



Property & Casualty


Bonds 1.8% 0.3% 3.7%




Total P&C 74.8% 68.0% 65.2%









Gross Revenues 100.0% 100.0% 100.0%


Net Revenues 98.3% 99.4% 99.5%

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees


P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees



L&HBonus/

Overrides







$25,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



Average $1,535,443 Average 1.46x

High $2,933,293 High 2.00x

Low $600,000 Low 1.00x

Acquired Revenues

% of Agencies

Acquiring

Average

Commissions

Acquired

% of

Net Revenues










10%

20%

30%

40%

50%

28.1%23.7%

0%

52.1%




111


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Expenses

Profitability

Employee Overview

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Service Staff Info

Technology

Insurance Carriers

Appendix




High 10.5%

Low 0.5%


High 27.5%

Low 2.9%



Life 24.3% 18.7% 28.3%

Disability 15.9% 22.0% 9.9%

Dental & Vision 21.7% 23.1% 12.1%





All Other 16.6% 21.1% 25.0%






$25,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


Commercial P&C


% of Book 45.6% 51.1% 53.2%

# of Accounts 64.8 61.3 64.4

Total Revenue $4,039,967 $4,195,592 $4,261,388


Between $10,000 and $25,000

% of Book 18.2% 16.6% 16.8%

# of Accounts 105.2 86.1 85.8

Total Revenue $1,611,042 $1,363,341 $1,348,298


Between $5,000 and $10,000

% of Book 12.1% 9.1% 8.5%

# of Accounts 152.8 105.9 97.6

Total Revenue $1,067,218 $750,354 $681,501


Less than $5,000

% of Book 24.1% 23.2% 21.4%

# of Accounts 2,112.5 1,658.9 1,434.4

Total Revenue $2,075,680 $1,902,053 $1,713,273



Group L&H/Financial

Over 100 Lives

% of Book 54.3% 55.1% 66.6%

# of Accounts 28.5 28.2 46.7

Total Revenue $1,657,013 $1,884,765 $2,609,431


50 - 100 Lives

% of Book 17.5% 22.2% 13.5%

# of Accounts 29.7 34.8 33.6

Total Revenue $532,665 $758,870 $528,936


25 - 50 Lives

% of Book 10.9% 11.0% 7.2%

# of Accounts 49.4 73.4 63.0

Total Revenue $346,339 $375,008 $281,951


Under 25 Lives

% of Book 17.3% 11.7% 12.7%

# of Accounts 461.3 280.8 241.3

Total Revenue $509,192 $399,997 $496,194





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Technology

Insurance Carriers

Appendix


*Insufficient Data


Commercial P&C

Renewals1 95.7% 93.9% 100.0%

New Business2 14.9% 15.1% 17.4%



Total Growth5 11.7% 8.9% 19.7%

Bonds P&C

Renewals1 71.9% 108.7% 97.5%

New Business2 35.9% 5.8% 28.2%



Total Growth5 7.8% 14.5% 25.7%

Personal P&C

Renewals1 95.4% 96.8% 96.4%

New Business2 12.1% 13.8% 10.6%



Total Growth5 8.5% 10.6% 11.5%


Renewals1 66.3% * 72.5%



Organic Growth4 -19.9% * -20.7%

Total Growth5 -18.5% * -15.1%






*Insufficient Data





$25,000,000

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Expenses

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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix


*Insufficient Data


Group Medical L&H

Renewals1 92.7% 93.5% 108.4%

New Business2 14.8% 14.2% 20.8%



Total Growth5 10.6% 7.8% 31.0%

All Other Group L&H

Renewals1 86.1% 97.7% 85.6%

New Business2 14.9% 13.3% 13.3%


Organic Growth4 1.0% 11.0% -1.1%

Total Growth5 1.5% 11.0% 1.7%

Individual L&H

Renewals1 53.2% 75.4% 58.6%

New Business2 44.4% 27.3% 36.2%


Organic Growth4 -2.4% 2.7% -5.2%

Total Growth5 -2.4% 2.7% -5.2%


Renewals1 96.3% 102.2% 108.3%

New Business2 15.4% 16.2% 18.5%



Total Growth5 10.7% 9.4% 21.3%

Brokerage Commission Expense Growth -5.0% * *



Other Income


L&H Bonus Income Growth -1.3% -0.6% 16.9%

















115


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Personal P&C 57.1%



Group Medical/Health Insurance 82.9%%

65.7%.All Other Group Benefits

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007 2008 2009 2010 2011 2012 2013 2014

10%

20%

30%

40%

17.0%

20.4%

33.4%

5.1%1.6%

15.0%

1.0%5.0%

11.3%

0.7% 1.1%

8.7%8 7%

2.4% 3.5%

10.1%

4.7% 4.1%

12.4% 10.4%7.3%7 3%

20.0%

10.8%10.5%

19.7%

0%






$25,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix






Total Payroll 56.2% 51.1% 55.3%







Selling Expenses




Total Auto 0.6% 0.4% 0.7%



Operating Expenses









Total IT 2.3% 2.4% 2.3%

Telephone 0.6% 0.4% 0.6%

Postage 0.3% 0.3% 0.4%




Insurance 1.2% 1.0% 1.2%


Bad Debts 0.2% 0.1% 0.0%









117


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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix





Interest 0.4% 0.2% 0.7%

Other 0.8% 0.2% 0.3%




EBITDA 17.9% 25.1% 17.2%






Administrative Expense -4.9% -3.7% -8.5%




10%

20%

30%

40%

50%

60%


3.2%3 2% 2.7%2 7% 3.5%

14.2% 14.5% 16.0%16 0%

2.6%2 6% 0.8%0 8% 2.7%2.7%

64.7% 63.8%63.8%58.5%





$25,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Bonds 1.8% 0.3% 3.7%


VAS - P&C 0.8% 0.1% 1.2%


Group Medical 15.1% 19.1% 20.2%






Total Revenues 100.0% 100.0% 100.0%


Net Revenues 98.3% 99.4% 99.5%



Selling 3.2% 2.7% 3.5%

Operating 14.2% 14.5% 16.0%




Pre-Tax Profit 15.4% 23.6% 14.0%



EBITDA3 17.9% 25.1% 17.2%






Profit/Loss Summary





119


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Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Profitability






5%

10%

15%

20%

25%

30%

35%

0%2008


21.6%

27.1%27 1%25.0%

20.4%

6.6%

19.2%

3.2%

18.2%18.2%16.3%

0.2%

16.7%16 7%

1.8%3.4%

15.8%17.9%

21.7%

5.9%7.6%7.6%

20102007 2009 2011 2012 2013 2014

Pro Forma EBITDA

15.1%

19.6% 19.7%17.7%17 7%

20.1%

2.3%2 3%





$25,000,000

120


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%

Balance Sheet




Aged Receivables







Financial Stability

Accounts Receivable







Rule of 20 20.3 23.6 28.8


EBITDA Margin

Rule of 20 Outcome

Willis Group 4.9% 24.0% 16.9

Aon 3.0% 20.9% 13.5

Brown & Brown 6.8% 33.5% 23.6



Rule of 20 Outcome

Organic

Revenue

Growth

1/2 of

EBITDA

Margin

Rule of 20 Score +=




121


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix













High 14.0

Low 1.0




HR Department


High 5.0

Low 0.2





$50K

$100K

$150K

$200K

$250K$1

79,7

11,

11

$205

,213

2

$178

,529

,9

1

$116

,4040

$6

$120

,66566

2

$114

,4200

$4

$63,

3080

$84,

548

44


$64,

1090

4For state association and Council fo





$25,000,000

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix




Top 25% $271,376 $316,076

Total Commissions in Producer’s Book Average $1,571,993 $924,043

Top 25% $2,492,641 $1,825,342


Top 25% $35,791 $40,116







per account of $1,084. (Typically, the total commissions in the producer’s book are not tracked
















123


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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%



# Validated 11.1

High 36.0

Low 1.0


Average Book Serviced (Commissions) $714,091 $1,147,191





# Validated 3.1

High 7.0

Low 1.0


Average Book Serviced (Commissions) $569, 795 $961,989





# Validated 2.4

High 8.0

Low 1.0







# Validated 7.6

High 23.0

Low 1.0












$25,000,000

124


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



New Producer Hiring





New Producers



1.4% 1.1% 1.7%

High 4.1%

Low 0.1%











13.3%51.1%12.2%18.9%

4.0%52.0%12.0%24.0%

12.0%48.0%12.0%28.0%




125


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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

















TPA Service Staff





*Insufficient Data







$25,000,000

126


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Service/Sales Support StaffAverage Top 25%


Number 28.2

High 53.4

Low 10.5


Total Commercial Service Payroll ($) $1,603,497



Number 1.5

High 2.0

Low 1.0





Number 12.4

High 44.0

Low 1.0





Number 10.5

High 34.6

Low 1.0





Number 1.4

High 6.0

Low 0.1





Number *

High *

Low *







127


Key Benchmarks

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Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix



AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


CO

MM

ER

CIA

L L

INE

SP

ER

SO

NA

L L

INE

SG

RO

UP

LIF

E &

HE

AL

TH

/FIN

AN

CIA

L

*Insufficient Data





$25,000,000

128


Key Benchmarks

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Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average Top 25%


Number 2.0

High 4.0

Low 1.0

Number of IT Employees per 100 users 2.3






Other included XDTI/Nexsure.

Technology




TAM25.7%

AMS36031.4%

EPIC14.3%

Other2.9%Vision

5.7%

Sagitta20.0%




129


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Producer Info

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Technology

Insurance Carriers

Appendix


Service Center Use

Total Personal Lines Commission placed in Carrier Service Center 12.4% 13.6% *





Personal Lines P&C

National 13.0 17.7 14.0

Regional 8.9 14.3 10.9

Total 21.8 32.0 24.9


National 29.9 28.0 37.0

Regional 17.8 24.1 22.0

Total 47.8 52.1 59.0




Carriers






*Insufficient Data





$25,000,000

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Insurance Carriers

Appendix



Top P&C Carrier $1,751,905 $1,311,780 $2,016,752


Top 3 P&C Carriers $3,575,172 $3,247,017 $3,881,360









+25% ProfitAverage


Personal29.8%


Personal34.0%



SmallCommercial6.8%


Personal35.2%

+25% Growth




Personal30.9%


Personal28.7%



Personal32.7%




131




132


Agencies with Revenues Over $25,000,000

$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000



Agencieswith RevenuesOver $25,000,000

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Appendix


Growth


Commercial P&C 7.1% 7.3% 12..0%

Personal P&C 2.6% 3.8% 4.0%

Group Medical 13.4% 15.8% 17.2%

All Other Group 4.9% -9.6% -2.6%


Profit



Rule of 20 Score 19.0 21.3 26.6

Financial

Average Top 25%





Productivity






Average Top 25%

Commercial P&C $127,777 $227,160

Personal P&C $51,360 $82,434










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Insurance Carriers

Appendix




Less than 50,000 0.0% 0.0% 0.0%

50,000 – 250,000 20.7% 28.6% 42.9%

250,000 – 1,000,000 44.8% 42.9% 28.6%

More than 1,000,000 34.5% 28.6% 28.6%

Corporate Structure

C 37.9% 42.9% 42.9%

S 51.7% 42.9% 42.9%


LLC 6.9% 0.0% 14.3%








Shareholders


High 122.0

Low 2.0



High 99.0%

Low 1.5%

Shareholder Age


Parent Corporation

Average





Other 0.0%

Member of Group

% of Agencies Belonging to a Franchise, Cluster, Alliance/Network or Aggregator Group 44.8% Other included Assurex Global, and Worldwide Broker

Network.





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Insurance Carriers

Appendix

Revenues



Property & Casualty


Bonds 3.5% 4.2% 2.7%




Total P&C 70.4% 74.6% 63.0%









Gross Revenues 100.0% 100.0% 100.0%


Net Revenues 97.6% 98.0% 96.9%

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees


P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees



L&HBonus/

Overrides





Agencieswith

RevenuesOver

$25,000,000

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Employee Overview

Producer Info

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Technology

Insurance Carriers

Appendix




High $2,998,725 High 1.90x

Low $160,000 Low 1.00x

Acquired Revenues

% of Agencies

Acquiring

Average

Commissions

Acquired

% of

Net Revenues

Acquisitions Made in Last 12 Months 34.5% $5,608,047 7.5%









10%

20%

30%

40%

50%

34.1%

17%

0%

29.2%




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Appendix




High 7.7%

Low 0.5%


High 20.1%

Low 2.2%



Life 26.1% 17.4% 28.5%

Disability 18.7% 15.3% 16.4%

Dental & Vision 26.2% 28.2% 21.8%





All Other 7.0% 1.6% 6.8%




Agencieswith

RevenuesOver

$25,000,000

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Appendix


Commercial P&C


% of Book 64.8% 66.9% 60.7%

# of Accounts 273.7 264.3 235.6

Total Revenue $22,413,256 $26,149,422 $16,606,740


Between $10,000 and $25,000

% of Book 14.6% 13.6% 15.4%

# of Accounts 317.1 326.7 265.9

Total Revenue $5,054,927 $5,325,050 $4,214,105


Between $5,000 and $10,000

% of Book 7.4% 7.2% 8.1%

# of Accounts 358.4 381.3 319.9

Total Revenue $2,562,312 $2,821,565 $2,224,503


Less than $5,000

% of Book 13.2% 12.2% 15.7%

# of Accounts 6,254.5 6,389.5 5,678.0

Total Revenue $4,737,726 $4,780,622 $5,018,283



Group L&H/Financial

Over 100 Lives

% of Book 63.0% 52.6% 55.9%

# of Accounts 134.1 148.7 134.3

Total Revenue $8,221,478 $6,096,228 $8,673,964


50 - 100 Lives

% of Book 16.6% 14.8% 17.4%

# of Accounts 140.0 101.0 212.0

Total Revenue $2,165,857 $1,715,379 $2,695,351


25 - 50 Lives

% of Book 7.8% 6.1% 8.9%

# of Accounts 185.9 110.3 321.8

Total Revenue $1,071,034 $704,729 $1,386,255


Under 25 Lives

% of Book 12.6% 26.5% 17.8%

# of Accounts 2,127.2 3,120.0 3,658.8

Total Revenue $1,726,029 $3,062,786 $2,768,361





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Insurance Carriers

Appendix


*Insufficient Data


Commercial P&C

Renewals1 94.8% 95.0% 99.3%

New Business2 12.3% 12.3% 12.6%



Total Growth5 8.1% 7.8% 15.0%

Bonds P&C

Renewals1 81.7% 90.8% 86.3%

New Business2 23.9% 13.7% 23.9%



Total Growth5 6.4% 4.5% 13.6%

Personal P&C

Renewals1 90.4% 95.3% 87.0%

New Business2 12.2% 8.6% 17.0%



Total Growth5 3.7% 4.7% 7.5%


Renewals1 79.6% 65.0% 90.9%

New Business2 30.2% 42.9% 19.6%



Total Growth5 9.8% 7.9% 10.4%








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Employee Overview

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Insurance Carriers

Appendix



Group Medical L&H

Renewals1 96.8% 103.9% 96.4%

New Business2 16.6% 12.0% 20.8%


Organic Growth4 13.4% 15.8% 17.2%

Total Growth5 17.4% 17.3% 27.8%

All Other Group L&H

Renewals1 91.0% 84.1% 82.5%

New Business2 13.9% 6.3% 14.9%


Organic Growth4 4.9% -9.6% -2.6%

Total Growth5 8.5% -8.8% 4.8%

Individual L&H

Renewals1 66.3% 58.8% 63.7%

New Business2 34.4% 24.9% 54.5%


Organic Growth4 0.8% -16.3% 18.3%

Total Growth5 1.1% -16.3% 18.3%


Renewals1 93.9% 94.1% 97.4%

New Business2 15.1% 13.1% 19.5%



Total Growth5 9.4% 7.8% 16.9%

Brokerage Commission Expense Growth 5.0% 3.8% 2.9%



Other Income


L&H Bonus Income Growth 6.8% 2.8% 12.6%

















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Employee Overview

Producer Info

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Insurance Carriers

Appendix





Personal P&C 48.3%4



Group Medical/Health Insurance 86.2%.

75.9%.All Other Group Benefits

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2007 2008 2009 2010 2011 2012 2013 2014

10%

20%

30%

40%

10.6%8.2%

21.4%

5.2% 6.2%

12.8%

1.7%6.6%

13.0%

1.2%3.0%

8.2%8 2%

3.3% 4.0%

9.0%5.6%

7.7%7 7%

21.9%

9.2% 10.7%16.5%

8.8%8.8%10.7%

16.5%

0%




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$25,000,000

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Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix






Total Payroll 56.0% 50.1% 55.3%







Selling Expenses




Total Auto 0.7% 0.8% 0.5%



Operating Expenses









Total IT 1.9% 1.7% 1.8%

Telephone 0.6% 0.5% 0.6%

Postage 0.3% 0.2% 0.3%




Insurance 1.3% 1.2% 1.0%


Bad Debts 0.1% 0.1% 0.1%









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Insurance Carriers

Appendix





Interest 0.4% 0.1% 0.5%

Other 0.8% 0.0% 0.4%




EBITDA 17.8% 26.5% 17.7%






Administrative Expense 7.3% 0.2% 24.6%




10%

20%

30%

40%

50%

60%


4.2% 3.8%3.8% 4.8%

13.3% 12.0%12 0% 13.7%

2.9%2.9% 0.6%0 6%3.0%

64.8% 64.4%64.4%58.6%



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Appendix




Bonds 3.5% 4.2% 2.7%


VAS - P&C 1.9% 1.2% 2.3%


Group Medical 19.4% 17.7% 21.7%






Total Revenues 100.0% 100.0% 100.0%


Net Revenues 97.6% 98.0% 96.9%



Selling 4.2% 3.8% 4.8%

Operating 13.3% 12.0% 13.7%




Pre-Tax Profit 14.8% 25.0% 14.1%



EBITDA3 17.8% 26.5% 17.7%






Profit/Loss Summary





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Insurance Carriers

Appendix

Profitability






5%

10%

15%

20%

25%

30%

35%

0%2008


18.6%

22.0% 21.5%21 5% 20.7%

4.5%

19.3%

4.9%

17.9%17.9%16.9%16 9%

4.5%

17.6%17 6%

4.7% 5.9%

19.2% 17.8%

19.9%

7.5%7.5%7.9%

20102007 2009 2011 2012 2013 2014

Pro Forma EBITDA

16.5%

19.8%19.4% 18.4%18 4%

21.7%

3.5%



Agencieswith

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$25,000,000

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Insurance Carriers

Appendix

Average Top 25%

Balance Sheet




Aged Receivables







Financial Stability

Accounts Receivable







Rule of 20 19.0 21.3 26.6


EBITDA Margin

Rule of 20 Outcome

Willis Group 4.9% 24.0% 16.9

Aon 3.0% 20.9% 13.5

Brown & Brown 6.8% 33.5% 23.6



Rule of 20 Outcome

Organic

Revenue

Growth

1/2 of

EBITDA

Margin

Rule of 20 Score +=




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Appendix







Average number of Agency Employees that work remotely 10.4 7.7 *






High 28.0

Low 4.0




HR Department


High 9.0

Low 1.0




*Insufficient Data

5%

10%

15%

20%

25%

30%

35%

0%

1-Revenue-By-Source

% T

otal

Rev

enue

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0%P&C

Contingent/Bonus

P&CVASFees


P&CBondsComm& Fees

P&CCommercial

Comm& Fees

L&HGroup

MedicalComm& Fees



L&HBonus/

Overrides

Investments Miscellaneous Compensation Selling Operating Administrative0%

10%

20%

30%

40%

50%

60%

70%

5-Expenses-as-Percent-of-NR

2008


18.6%

22.0% 21.5% 20.7%

4.5%

19.3%

4.9%

17.9%16.9%

4.5%

17.6%

4.7% 5.9%

19.2% 17.8%

19.9%

7.5%7.9%

20102007 2009 2011 2012 2013 2014

3-Historical-Organic-Growth

2007 2008 2009 2010 2011 2012 2013 2014

10%

20%

30%

40%

10.6%8.2%

21.4%

5.2% 6.2%

12.8%

1.7%6.6%

13.0%

1.2%3.0%

8.2%

3.3% 4.0%

9.0%5.6%

7.7%

21.9%

9.2% 10.7%16.5%

8.8%10.7%

16.5%

0%

4-Future-Growth


Personal P&C 48.3%


Individual Life & Health 24.1%


75.9%All Other Group Benefits

7-Productivity

6-Historical-EBITDA-and-Operating


$50K

$100K

$150K

$200K

$250K$2

03,8

73

$218

,807

$210

,296

$131

,686

$127

,274

$135

,612

$72,

187

$91,

533

9-New-Prod-Hiring-Practices

10-Agency-Mgmt-System-Utilized

11-Top-PC-Carrier-LOB

+25% ProfitAverage


Personal3.1%


Personal12.7%






Personal22.8%

+25% Growth

+25% Growth

12-Top-3-PC-Carrier-LOB

+25% ProfitAverage


Personal9.7%


Personal12.5%



Personal22.6%


8-How-Successful-Prod-Spent-Time







EPIC31.0%

Sagitta27.6%

AMS3606.9%

Other3.4%Vision

6.9%

TAM24.1%





4.2% 3.8% 4.8%

13.3% 12.0% 13.7%

2.9% 0.6%3.0%

64.8% 64.4%58.6%

Pro Forma EBITDA

16.5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2-Specialty/Niche Revenue as % of Net Revenue


10%

20%

30%

40%

50%

34.1%

17%

0%





19.8%19.4% 18.4%

21.7%






16.2%64.0%9.0%

10.8%

35.0%50.0%5.0%

10.0%

16.7%61.1%11.1%11.1%

29.2%3.5%

$74,

684



Agencieswith

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$25,000,000

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Service Staff Info

Technology

Insurance Carriers

Appendix




Top 25% $403,117 $479,736

Total Commissions in Producer’s Book Average $2,121,258 $1,367,815

Top 25% $3,192,698 $1,906,993


Top 25% $84,173 $60,274










*Insufficient Data














149


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Appendix

Average Top 25%



# Validated 35.4

High 92.0

Low 9.0







# Validated 12.9

High 32.0

Low 2.0







# Validated 2.2

High 5.0

Low 1.0







# Validated 6.2

High 19.0

Low 1.0

Average New Commissions Produced Annually $194,175 *

Average Book Serviced (Commissions) $1,153,534 *






*Insufficient Data



Agencieswith

RevenuesOver

$25,000,000

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Insurance Carriers

Appendix



New Producer Hiring

% of Agencies that Hired New Producers Last Year 89.7% 57.1.% 100.0%




New Producers



1.3% 1.3% 1.1%

High 3.1%

Low 0.2%











16.2%64.0%

9.0%10.8%

35.0%50.0%

5.0%10.0%

16.7%61.1%11.1%11.1%




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Insurance Carriers

Appendix












# of Service Staff 11.7 * *

Total TPA Revenues Serviced $1,562,860 * *




TPA Service Staff





*Insufficient Data





Agencieswith

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$25,000,000

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Appendix


Average Top 25%


Number 100.1

High 243.0

Low 33.0


Total Commercial Service Payroll ($) $6,429,040



Number 5.7

High 19.0

Low 1.0





Number 13.1

High 42.0

Low 1.0





Number 35.1

High 95.0

Low 6.0


Total Group L&H Service Payroll ($) $2,178,777



Number 3.8

High 19.6

Low 0.5

Average Revenue per Staff $286,259 $1,344,066




Number 10.3

High 21.0

Low 3.0


Total Multi-Line Service Payroll ($) $693,669

Payroll (as % of Total Multi-Line Revenue) 27.4%*Insufficient Data




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Insurance Carriers

Appendix



AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR


Marketing


Claims


AE


CSR


Processor/Asst CSR

Average Low $31,490 * $31,901Average High $48,704 $48,775 $48,268

Marketing


Claims


CO

MM

ER

CIA

L L

INE

SP

ER

SO

NA

L L

INE

SG

RO

UP

LIF

E &

HE

AL

TH

/FIN

AN

CIA

L

*Insufficient Data



Agencieswith

RevenuesOver

$25,000,000

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Insurance Carriers

Appendix

Average Top 25%


Number 7.3

High 26.4

Low 1.4

Number of IT Employees per 100 users 2.5


Total IT Payroll Expense ($) $572,776 $1,170,644




Other included multiple systems used.

Technology




EPIC31.0%

Sagitta27.6%

AMS3606.9%

Other3.4%Vision

6.9%

TAM24.1%




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Appendix


Service Center Use






Personal Lines P&C

National 14.5 8.0 10.9


Total 24.3 17.3 20.5


National 38.1 27.6 22.9

Regional 35.4 25.5 26.8

Total 73.5 53.1 49.7




Carriers






*Insufficient Data



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$25,000,000

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Insurance Carriers

Appendix

Revenue from Top Insurance CarriersAverage +25% Profit +25% Growth


Top P&C Carrier $3,892,484 $3,482,258 $4,739,303


Top 3 P&C Carriers $8,577,221 $7,231,614 $10,212,947




+25% ProfitAverage


Personal3.1%


Personal12.7%





Personal22.8%

+25% Growth




Personal9.7%


Personal12.5%



Personal22.6%








157




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Appendix

$1,250,000 $25,000,000$2,500,000 $5,000,000 $10,000,000



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Appendix

Population DensityAgencies with Revenues UNDER $5,000,000

Population Where Home Office is Located:Less than

50,000

50,000 to

250,000

250,000 to

1,000,000

Over

1,000,000

% of Agencies Located in Each Population 20.4% 13.6% 6.4% 10.7%

Net Revenue Growth (Organic) 7.3% 7.1% 7.4% 9.3%

Profitability as % of Net Revenues

Pre-tax Profit 22.0% 23.2% 21.9% 19.4%

Pro Forma Pre-tax Profit 27.2% 27.4% 23.8% 24.1%

Operating Pre-tax Profit 14.3% 15.3% 14.7% 12.1%

EBITDA 25.2% 25.9% 24.6% 21.4%

Pro Forma EBITDA 30.3% 30.1% 26.5% 26.1%

Value Creation “Rule of 20” Score 21.3 20.8 19.3 21.0

Productivity

Revenue per Employee $139,349 $157,872 $161,489 $148,180

Compensation per Employee $74,872 $83,587 $88,089 $90,925

Spread per Employee $64,476 $74,285 $73,400 $57,255

Pay Levels for Producers

Commercial P&C $101,761 $137,256 $106,136 $160,844

Personal P&C $43,516 $74,348 $63,333 $60,023

Life & Health / Financial $64,598 $74,645 * $107,141

Multi-Line $99,545 $138,829 $140,436 $148,890

Total Number of Service / Sales Support Staff per Line of Business

Commercial P&C 3.6 5.6 5.3 6.5

Personal P&C 4.1 4.0 2.4 3.3

Group Life & Health 1.3 1.1 * 0.9

Multi-Line 2.3 * * *

Total Service / Sales Support Staff Payroll as % of LOB Revenue

Commercial P&C 18.5% 20.6% 21.7% 24.7%

Personal Lines 22.6% 23.1% 21.7% 30.9%

Group Life & Health 59.1% 26.3% * 27.6%

Multi-Line 20.2% * * *

Number of Carriers

Personal Lines 11.2 11.3 15.6 12.2

Commercial Lines 11.9 22.8 20.2 23.9

Life & Health 7.5 13.2 7.2 15.2

Service Center Use

Total PL Comms Placed (as % of PL Revenues) * 44.8% 25.6% *

Total CL Comms Placed (as % of CL Revenues) 12.9% 8.6% 26.0% 13.6%

% of Agencies Making an Acquisition in the last 12 Months 16.7% 3.6% 0.0% 18.2%

*Insufficient Data



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Appendix

Population DensityAgencies with Revenues OVER $5,000,000

Population Where Home Office is Located:Less than

50,000

50,000 to

250,000

250,000 to

1,000,000

Over

1,000,000

% of Agencies Located in Each Population 7.3% 9.6% 15.1% 17.0%

Net Revenue Growth (Organic) 6.5% 10.3% 8.8% 10.1%


Pre-tax Profit 14.5% 17.9% 16.6% 15.5%

Pro Forma Pre-tax Profit 16.7% 20.4% 20.5% 19.3%

Operating Pre-tax Profit 5.8% 11.3% 8.8% 8.0%

EBITDA 18.9% 21.2% 18.7% 18.3%

Pro Forma EBITDA 21.1% 23.7% 22.6% 22.1%

Value Creation “Rule of 20” Score 17.1 22.2 19.0 20.7

Productivity

Revenue per Employee $154,264 $181,040 $184,384 $194,521

Compensation per Employee $95,138 $111,475 $118,418 $126,501

Spread per Employee $58,946 $69,566 $65,966 $68,020


Commercial P&C $131,722 $168,755 $209,249 $220,329

Personal P&C $51,650 $66,885 $101,846 $81,690

Life & Health / Financial $140,940 $200,951 $214,375 $226,808

Multi-Line $180,497 $233,506 $210,006 $178,581


Commercial P&C 20.4 28.4 45.3 29.1

Personal P&C 14.5 9.0 12.8 9.8

Group Life & Health 6.3 13.6 19.3 17.7

Multi-Line * * * *


Commercial P&C 20.5% 19.9% 19.3% 20.6%

Personal Lines 26.4% 23.4% 25.1% 24.9%

Group Life & Health 16.3% 16.5% 14.4% 17.8%

Multi-Line * * * *

Number of Carriers

Personal Lines 23.9 16.9 23.5 22.1

Commercial Lines 46.8 37.2 67.3 44.3

Life & Health 38.3 38.8 60.0 46.4

Service Center Use

Total PL Comms Placed (as % of PL Revenues) 29.3% 27.6% 18.3% 23.6%

Total CL Comms Placed (as % of CL Revenues) * 3.1% 5.1% 2.7%

% of Agencies Making an Acquisition in the last 12 Months 6.7% 20.0% 22.6% 22.9%

*Insufficient Data



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Regional AnalysisAgencies with Revenues UNDER $5,000,000

Geographic Region: Northeast Southeast Midwest Southwest West

% of Agencies Located in Each Region 8.3% 13.6% 14.6% 9.3% 5.4%

Net Revenue Growth (Organic) 9.1% 10.0% 4.7% 6.4% 9.8%


Pre-tax Profit 19.7% 16.2% 25.2% 25.1% 24.0%

Pro Forma Pre-tax Profit 26.0% 21.2% 27.9% 30.0% 27.7%

Operating Pre-tax Profit 10.5% 9.4% 18.1% 15.3% 19.2%

EBITDA 23.3% 18.9% 28.0% 27.6% 25.8%

Pro Forma EBITDA 29.6% 23.9% 30.7% 32.5% 29.4%

Value Creation “Rule of 20” Score 22.3 19.5 19.2 21.8 25.1

Productivity

Revenue per Employee $136,203 $140,259 $150,707 $177,117 $136,658

Compensation per Employee $75,647 $86,354 $77,884 $92,731 $75,294

Spread per Employee $60,556 $53,905 $72,823 $84,386 $61,364


Commercial P&C $109,593 $160,399 $104,398 $125,083 $113,055

Personal P&C $54,824 $48,183 $54,190 $57,500 $48,750

Life & Health / Financial * $108,878 $65,316 * $106,000

Multi-Line $100,390 $137,802 $105,279 $146,264 *


Commercial P&C 3.8 5.5 4.4 6.5 4.5

Personal P&C 5.3 2.9 4.3 3.6 1.9

Group Life & Health 0.8 1.4 1.3 0.9 0.9

Multi-Line * * 3.0 * *


Commercial P&C 28.5% 22.8% 16.7% 18.3% 19.2%

Personal Lines 23.4% 24.6% 21.9% 27.1% 27.9%

Group Life & Health 47.1% 26.0% 12.6% 27.4% 12.1%

Multi-Line * * 20.6% * *

Number of Carriers

Personal Lines 10.6 14.8 10.6 12.9 9.9

Commercial Lines 10.3 23.2 15.1 24.3 16.5

Life & Health 7.8 11.4 9.9 11.0 14.9

Service Center Use

Total PL Comms Placed(as % of PL Revenues) * 29.1% * * *

Total CL Comms Placed(as % of CL Revenues) 12.9% 3.6% * * 37.4%

% of Agencies Making an Acquisition in the last 12 Months 17.6% 7.1% 6.7% 15.8% 18.2%

*Insufficient Data



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Regional AnalysisAgencies with Revenues OVER $5,000,000

Geographic Region: Northeast Southeast Midwest Southwest West

% of Agencies Located in Each Region 10.7% 12.7% 9.3% 8.8% 7.8%

Net Revenue Growth (Organic) 8.3% 8.5% 11.1% 8.5% 10.2%


Pre-tax Profit 16.0% 16.6% 15.9% 18.5% 13.3%

Pro Forma Pre-tax Profit 18.8% 20.0% 18.5% 20.8% 19.3%

Operating Pre-tax Profit 8.7% 9.5% 6.0% 11.2% 7.2%

EBITDA 20.4% 18.7% 18.7% 20.6% 16.5%

Pro Forma EBITDA 23.3% 22.1% 21.3% 23.0% 22.4%

Value Creation “Rule of 20” Score 20.5 18.6 20.0 19.7 21.4

Productivity

Revenue per Employee $175,779 $174,870 $185,636 $183,611 $200,817

Compensation per Employee $107,305 $112,812 $119,522 $116,259 $131,272

Spread per Employee $68,474 $62,058 $66,114 $67,352 $69,545


Commercial P&C $146,672 $205,766 $213,707 $170,852 $226,633

Personal P&C $55,833 $88,579 $76,014 $89,734 $84,181

Life & Health / Financial $146,320 $232,882 $219,707 $193,891 $217,331

Multi-Line $101,307 $196,712 $282,598 $185,452 $273,921


Commercial P&C 25.3 31.8 43.1 25.5 40.6

Personal P&C 16.0 11.0 9.7 11.4 6.9

Group Life & Health 8.2 15.0 28.6 8.7 20.0

Multi-Line 11.0 * * * *


Commercial P&C 22.4% 20.5% 19.9% 16.8% 19.5%

Personal Lines 24.8% 22.4% 28.1% 26.1% 23.6%

Group Life & Health 21.1% 15.4% 15.9% 14.4% 14.1%

Multi-Line 9.3% * * * *

Number of Carriers

Personal Lines 22.6 26.1 19.6 20.6 16.3

Commercial Lines 36.6 59.3 52.7 56.8 48.5

Life & Health 34.6 47.2 57.2 39.4 65.7

Service Center Use

Total PL Comms Placed(as % of PL Revenues) 18.5% 28.0% 33.9% 21.4% 25.4%

Total CL Comms Placed(as % of CL Revenues) 11.1% 2.1% 0.8% 1.9% 3.0%

% of Agencies Making an Acquisition in the last 12 Months 18.2% 19.2% 31.6% 16.7% 12.5%

*Insufficient Data



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In addition to the average results for each study group, the study provides insights on how the “best of the best” are operating. This table will help you understand the terms used to report this information.

HEADING REFERS TO

Averagethe average results achieved by all the firms in the study group for a particular factor. (Extreme high and low results distorting the average have been excluded.)

High the highest results achieved in the peer group for a particular factor

Low the lowest results achieved in the peer group for a particular factor

Top 25%the average results achieved by the Top 25% of the firms in the group for that particular factor or line item. (The firms comprising this group will be different for each factor or line item.)

+25% Profit

the average results achieved by the 25% of firms having the greatest pro forma profitability as a percent of net revenues. (The firms comprising this group are the same for each factor or line item.)

+25% Growththe average results achieved by the 25% of firms experiencing the greatest growth in net revenues. (The firms comprising this group are the same for each factor or line item.)

GlossaryREVENUES (as reported for most recently completed fiscal year-end and stated as a percentage of gross revenues)

Property & Casualty:1. Commercial Commissions & Fees — Commissions (both direct & agency billed) and fees earned in lieu of

commissions for the sale of commercial P&C insurance.

2. Bonds — Commissions from the sale of all bonds (surety, fidelity, etc.)

3. Personal Commissions — Commissions (both direct & agency billed) from the sale of personal P&C insurance.

4. Value Added Services — Revenues from a Worker’s Comp TPA, loss control , engineering, risk management, consulting services, self-insurance programs, underwriting and claims services, additional carrier compensation or reimbursements for services provided on their behalf, etc.

5. Contingent / Bonus — Profit sharing, bonus, and supplemental income received from insurance carriers

6. Total P&C — The sum of items 1 - 5

Life & Health / Financial7. Group Medical Commissions & Fees — Commissions & fees from the sale of group health/medical insurance

ONLY.

8. All Other Group Commissions & Fees — Commissions & fees from the sale of all other employee benefits products and services, including group life, dental, disability, pension, 401(k)s, PEOs, and investment products. Also includes any revenue from the delivery of value added services (VAS), i.e., revenues from a Benefits TPA, HR/Wellness/other consulting services, actuarial services, risk management, cost containment, and other VAS related to employee benefits, L&H/Financial Services.

9. Individual Commissions & Fees — Commissions from the sale of individual life, health, dental, disability & investment products.

10. Bonus / Overrides — Bonus or incentive payments paid to agency for L&H production, usually for volume, persistency, growth, etc.

11. Total L&H / Financial — The sum of items 7 - 10

12. Investments — Income from interest, dividends, premium finance, late charges, gains/losses on sales of marketable securities (investment type securities)



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13. Miscellaneous — Income from countersignatures fees, gains/losses on fixed or intangible assets, life insurance proceeds

14. Gross Revenues — The sum of items 6, 11, 12 & 13

15. Brokerage Commission Expense — Commissions paid to other agencies or outside brokers. Does NOT include in-house producers that are paid on a 1099.

16. Net Revenues — Gross Revenues less Brokerage Commission Expense

EXPENSES (as reported for most recently completed fiscal year-end and stated as a percentage of net revenues)

Compensation Payroll: The following payroll breakdown is for the entire agency including agency owners:

17. Employees — Salaries, commissions, bonuses, management fees, and discretionary owner compensation

18. “Non-Employees” 1099 Producers /Temporary Help — Commissions, bonuses for agency’s producers compensated on 1099. (Does not include producers/agencies to which you pay outside broker commissions.) Also includes expenses for outside temporary staffing, temp-to-perm staffing expenses, etc.

19. Total Payroll — The sum of items 17 - 18

Benefits:

20. Payroll Taxes — All payroll taxes (SS, FICA, FUTA, etc.)

21. Retirement — Expenses related to a 401(k), ESOP/ESOT, miscellaneous retirement benefits

22. Insurance — Health ins, medical reimbursements, life ins (except “key man” life), disability insurance

23. Other – Wellness programs, health club memberships, gifts, etc.

24. Total Benefits — The sum of items 20-23

25. Total Compensation — The sum of items 19 & 24

Selling26. Travel & Entertainment/Conventions — Airfare, meals, hotels, social/country club dues, convention related

expenses (Excludes professional dues/memberships)

27. Auto Expenditures — Lease, gas, maintenance/repair, employee parking, mileage allowances, etc.

28. Auto Depreciation — Depreciated expense for current year that is associated with auto only.

29. Total Auto — The sum of items 27 & 28

30. Advertising / Promotion — Promotional / advertising materials, target marketing services, fees paid to advertising or public relations agencies, media buys, contest rewards, customer relations functions, gifts, telemarketing, etc.

31. Total Selling — The sum of items 26, 29 & 30

Operating32. Occupancy Expenditures — Total rent, utilities, building/grounds maintenance, property taxes, janitorial

services, storage & other building related expense. (net rental/sublet income against Occupancy Expense)

33. Occupancy Depreciation/Amortization — Building depreciation, leasehold amortization

34. Total Occupancy — The sum of items 32 & 33

35. Office Equipment Expenditures — Leases and expensed equipment purchases including copier leasing/maintenance, telephone & fax leasing/maintenance, postage meters lease/maintenance, office furniture & fixtures leasing/maintenance (Excludes IT equipment)



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36. Office Equipment Depreciation/Amortization — Current year depreciation expense for equipment, furniture, fixtures. Include Section 179 purchases.

37. Total Office Equipment — The sum of items 35 & 36

38. IT Expenditures — Expensed/leased computers, servers, software, wiring, maintenance and maintenance contracts, website development/maintenance, website hosting, internet connections, & training.

39. IT Depreciation / Amortization — Current year depreciation expense for computers, servers, etc, software amortization. Include Section 179 items.

40. Total IT — The sum of items 38 & 39

41. Telephone — Local & long distance, cellular telephone, and fax expenses. (Excludes leased telephone equipment; included under Office Equipment)

42. Postage — Postage, Express mail, FedEx, UPS, courier services (Excludes postage meter lease/maintenance; included under Office Equipment)

43. Supplies / Printing — Office supplies, paper, copying/printing, coffee/soft drinks/break room expenses

44. Dues / Subscriptions/ Contributions — Professional dues/membership fees, periodical & information services subscriptions, contributions

45. Taxes / Licenses — Miscellaneous local & franchise taxes, sales tax, other property taxes, license fees. (Excludes property taxes entered under Occupancy, payroll taxes, & state/federal income taxes)

46. Insurance — All property & casualty insurance including employee auto insurance, and any payments for E&O claims /settlements

47. Professional Fees — Expenses for CPAs, lawyers, consultants and other outside advisors (Excludes directors’ fee included in Administrative-Other)

48. Bad Debts — Any bad debts written off, claims paid (Excludes E&O claims/settlements)

49. Outside Services — MVRs, bank fees, employment fees, moving expenses and all other outside service expense including those used to deliver value added services to the agency’s clients (e.g. Zywave, actuarial services, COBRA administration, etc.)

50. Education / Training — Registration fees, materials, in-house training programs, etc. (Excludes training on how to use your agency management system or other agency technology)

51. Miscellaneous — Other non-specific miscellaneous operating expenses not included elsewhere

52. Total Operating — The sum of items 34, 37, 40-51

Administrative53. Amortization of Intangibles — Acquired expirations, covenants, non-competes, etc.

54. Officer Life — Premium paid by agency, agency is beneficiary

55. Interest — All interest expense incurred

56. Other — Director’s fees, non-specific overhead allocations to parent companies, deferred compensation, and any other miscellaneous administrative expenses

57. Total Administrative — The sum of items 53-56

58. Total Expenses — The sum of 25, 31, 52, & 57

PROFITABILITY

59. Pretax Profit / Loss — Net revenues minus total expenses.

60. EBITDA — (Earnings Before Interest, Taxes, Depreciation, and Amortization) The agency’s profit before interest, taxes, depreciation and amortization expenses are included.

61. Pro Forma Pretax Profit — The agency’s profit if all “discretionary” expenditures made for the benefit of the owners, based solely on ownership, were removed and all extraordinary / non-reoccurring expenses or revenues were normalized.



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62. Operating Pre-Tax Profit — Pretax profit minus contingents, bonus and investment income.

63. Pro Forma EBITDA — See items 60 (EBITDA) and 61 (Pro Forma Pretax Profit).

64. “Rule of 20” Score — a valuation metric developed by Reagan Consulting that is the sum of the agency’s pro forma EBITDA margin times 50% plus the organic revenue growth rate. It provides a quick means of calculating whether or not an agency is creating significant returns for its shareholders.

FINANCIAL STABILITY

65. Current Ratio — Current assets divided by current liabilities. A current ratio greater than 1:1 indicates that cash and assets with short term maturities are sufficient to meet a firm’s short-term obligations.

66. Tangible Net Worth — Total assets minus intangible assets equals total tangible assets. Total tangible assets minus total liabilities equals tangible net worth. Represents the net value of the corporation if it were liquidated. A low or negative tangible net worth impacts a firm’s ability to invest in new opportunities, develop new products, hire new employees, make other capital expenditures and handle stockholder redemption obligations.

67. Receivables/Payables Ratio — Accounts receivable divided by accounts payable. This ratio measures the collection practices of an agency, with a lower ratio representing more timely collections of those amounts due from insureds.

68. Aged Receivables — Measures the length of time that receivables are past due (over 60 days, over 90 days). Receivables aged greater than 60 days tend to have a magnified impact on the agency’s liquidity as payments are most always due to insurance companies on or before 60 days, thus forcing the agency to use its own funds to pay carriers.

EMPLOYEE OVERVIEW

69. Total # of Employees (FTE) — Total number of full-time equivalent employees including agency principals.

70. Revenue per Employee — Net revenues divided by the total number of full-time equivalent employees.

71. Compensation per Employee — Total compensation divided by total number of full-time equivalent employees.

72. Remote Workers — An employee whose main location is in their home or other site not physically located within an agency’s physical space.

73. Spread per Employee — Total revenue per employee minus compensation per employee. While revenue per employee is a standard for measuring productivity, the “spread” measures the dollars per employee available to pay all other agency expenses and generate a profit for the agency.

PRODUCER INFORMATION

74. Validated Producer — Producers whose book of business is sufficient to cover his/her wages under agency’s commission formula.

75. Unvalidated Producer — Producers whose production does not yet cover his/her wages under agency’s commission formula.

76. NUPP — Net Investment in Unvalidated Producer Pay. Expressed as a percentage of net revenue, the NUPP is the difference between what an agency pays its unvalidated producers and what the producers would earn under the agency’s normal commission schedule.

77. Annual Pay per Producer — Includes only compensation that shows up on the producer’s W-2 that resulted from the producer’s production responsibilities.



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SERVICE STAFF INFORMATION

78. Service Staff — Typically non-commissioned personnel who are responsible for providing service to the agency’s clients and/or supporting producers in the sale of new business and the retention of existing business.

79. Service /Sales Support Staff Definitions:

• Account Executives (AE) — Senior level service position, often assigned to a Commercial P&C or Group L&H producer in order to support & enable the producer to focus on new business production. Primary responsibility is to manage the overall service plan/activities for an existing book of business and to maintain ongoing client relationships including renewals & account development. In some agencies the AE position may have specific responsibility to solicit new clients or write new business that is referred/comes to agency, but a majority of time is spent on service and client retention.

• Customer Service Reps (CSR)s / Account Managers — Senior level service position in agencies where the AE position does not exist to support the producer. Position will serve as the main service contact for the client. Customer service duties are similar to AE duties including renewals, account upgrading, cross-selling, etc., but may include some processing responsibilities (e.g. coordinate new client set-up, prepare proposals, order & check policies, issue certificates, binders, billings, etc.).

• Assistant CSRs/Processors — Lower level service position whose main function is to support AEs or other senior level service staff. Position may or may not have direct client contact. Duties vary but are usually processing oriented (e.g. coordinate new client set-ups, prepare proposals, order & check policies, issue certificates, binders, billings, etc.).

• Marketing — Has responsibility to negotiate with carriers to obtain coverage for clients (solicit quotes/rates, negotiate coverage/pricing; place new & renewal business with carriers; may prepare proposals/binders). Keeps track of market trends, pricing and underwriting policies. If you do not have a person dedicated to these activities, leave blank.

• Claims — Coordinates P&C claims reporting, tracking, processing, and analysis for agency and its clients; delivers VAS claims services. If you do not have a person dedicated to these activities, leave blank.

80. Service Staff Pay Ranges— Pay includes Salary, Commissions, and Bonuses but does NOT include benefits or payroll taxes.

INSURANCE CARRIERS

81. Top Carrier Commissions: Small Commercial Accounts — Accounts generating less than $7,500 in commission income.

82. Carrier Service Center Use — Carriers with whom agency has the option of placing policies in their service centers (i.e., the carrier will assume the role of providing customer service to the policyholder).


Reagan Consulting, Inc.

1 Piedmont Center, Suite 500Atlanta, GA 30305(404) 233-5545(404) 237-5996 - faxwww.reaganconsulting.com

Independent Insurance Agents and Brokers of America

127 S. Peyton StreetAlexandria, VA 22314(800) 221-7917(703) 683-7556 - faxwww.independentagent.com

Independent Insurance Agent


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